To provide relief to drought-hit farmers, the Empowered Group of Ministers (EGoM) on drought is likely to take up the proposal of slashing interest rate on crops loans, that are rescheduled into term loans, to 7% from the existing 12%, at its meeting in New Delhi on Tuesday.
"The proposal on interest subvention on crop loan, especially those rescheduled as term loan due to drought in some states, will come up for discussion in the meeting of the EGoM on drought scheduled for tomorrow," a source privy to the development said.
Among other proposals that the EGoM on drought, headed by Agriculture minister Sharad Pawar, would discuss include providing more number of guaranteed work under the MNREGA from 100 to 150 days considering the current year as special case, the source said.
Besides, it would also discuss about a special package for protective irrigation to save orchard crops, he added.
According to another source, one of the major proposals is on interest subvention on crop loan as this would give a big relief to drought-hit farmers.
Presently, crop loans are given at the interest rate of 7%. During agrarian crisis like drought, the recovery is automatically rescheduled, that is, crop loan is converted into a term loan and farmers get three years time to repay.
However, the rescheduling of crop loans is not benefiting farmers to a greater extent as interest rate for term loan is higher at 12%.
Hence, the Agriculture Ministry has proposed bringing the interest rate on term loan at par with the crop loan at 7%, the source noted.
Due to deficit rains, four-states -- Karnataka, Gujarat, Maharashtra and Rajasthan have declared drought in more than 390 taluks. Monsoon deficiency in the country has come down to 9% so far.