Protest fallout: Farmers continue to get short-term crop loans up to Rs 3 lakh at 7% interest
The Cabinet decision to continue the interest subvention comes at a time when there are farmers protest in several parts of the country, particularly in Madhya Pradesh demanding farm loan waiverindia Updated: Jun 14, 2017 16:19 IST
Farmers will continue to get loans of up to Rs 3 lakh for a year at a subsidised interest rate of 7%, and those who have a track record of repaying promptly will get it at 4%, the government said on Wednesday.
The move, approved by the Union Cabinet, comes at a time when prices of farm produce have crashed across India and demands for farm loan waivers have grown. Some states, including Maharashtra and Uttar Pradesh, have said they will write-off loans of small and marginal farmers. Last week, six farmers protesting against the falling prices were killed in police firing and lathi-charge in Madhya Pradesh’s Mandsaur.
The extension of the Interest Subvention Scheme will cost the central government Rs20,339-crore in 2017-18, up by about a fourth over last year. The higher amount will help cover more farmers and possibly ensure they don’t borrow from moneylenders at usurious rates.
“This institutional credit will help in delinking the farmers from non-institutional sources of credit, where they are compelled to borrow at usurious rates of interest,” a statement issued by the government said.
The Reserve Bank of India (RBI) had asked banks last month to continue providing discounted short-term crop loans to farmers battling low prices after a bountiful harvest and the government’s sudden demonetisation move that sucked cash out of the rural economy.
Lending institutions make available short-term credit at the ground level at 7% per annum to farmers. An additional interest subvention of 3% per annum is available to the farmers who pay after one harvest season – a period that usually extends to six months.
For 2017-18, the target of agriculture credit has been raised to Rs 10 lakh crore, from Rs 9 lakh crore in 2016-17.
(With input from agencies)