The government could look at a proposal to provide credit for crops to all farmers at 6 per cent. At present only those farmers who have repaid their loans on time can avail credit at 6 per cent, while others have to pay an interest rate of 7 per cent. An announcement to this effect could be made in the forthcoming budget.
“There is a proposal to lower the crop loan to 6 per cent from 7 per cent but we will have to see the implication as well,” an official source told Hindustan Times.
Lowering the interest rate of crop loans by another percentage point would further provide a blow to the exchequer.
“We are currently trying to see how this can be worked out,” the source, who did not wish to be identified said.
In the last budget, Finance Minister Pranab Mukherjee announced continuation of the interest subvention scheme for short-term crop loans to farmers for loans up to Rs 3 lakh per farmer at the interest rate of 7 per cent per annum.
Due to a weak monsoon last year, there has been a drop in agriculture output. The minister has already stressed the need to focus on the agriculture sector in a bid to pull up its growth rate to at least 4 per cent, a move that would help in maintaining an equitable growth.