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Rewards for farmers who repay loans?

business Updated: Jun 18, 2009 21:20 IST
Mahua Venkatesh

The UPA government is looking at rewarding those farmers who have repaid their loans on time. The Rs 60,000 crore debt-waiver scheme, which wiped out outstandings of all farmers who defaulted, created discontentment among those who had repaid on time.

The forthcoming budget is likely spell out the finer details of the “reward” plan.

One of the options could be providing cheaper agriculture credit to those farmers who have repaid their loans on time. A senior government official said a proposal to this extent is under consideration, and a decision would be taken after weighing the pros and cons.

“We want to devise a scheme that would reward those farmers who have been repaying on time. There was disapproval from the farmers who repaid their loans on time as they did not gain from the scheme,” the official said, adding that the finance ministry is exploring various options in this regard.

The government is already looking at providing agriculture loans to all farmers at 6 per cent against the current 7 per cent. The target for agriculture credit for 2009-10 would also be increased to about Rs 3,10,000 crore for public sector banks.

Another official source also said that the thrust should be on strengthening and expanding cold storage facilities and logistics exercise of agriculture produce. The official added that wastage of agriculture produce is substantially high and the issue needs to be addressed at the earliest.

The scheme announced in the Union budget of 2008-09 was aimed at providing relief primarily to small and marginal farmers. In a bid to address the problem of indebtedness of farmers, agricultural loans given by scheduled commercial banks, co-operative and regional rural banks up to March 31, 2007 and overdue as of December 31 2007 got covered under the debt waiver scheme.