The UPA government may ask state-run banks to further reduce the interest rate on loans to farmers, a move that could cost the exchequer up to Rs 7,000 crore annually.
This was indicated by Congress chief Sonia Gandhi at an election rally at Buldhana in Maharasthtra’s Vidarbha region, 400 km from Nagpur on Wednesday. Gandhi said the Centre was considering reducing the interest rate to 3 per cent from the current 6 per cent.
Last year, banks cut the interest rate on farm loans from 7 to 6 per cent, with the government bearing the cost of the concession, which was estimated at Rs 2,200 crore annually. If the same procedure is followed, reducing the rate to 3 per cent would mean that the government would have to provide upto Rs 7,000 crore to subsidise state-run banks.
Gandhi said her party understands the pain and agony of farmers in Vidarbha, which was going through a severe agrarian crisis.
We’ll tame prices: PM
Separately, at a Congress rally in Ambala, Haryana, Prime Minister Manmohan Singh expressed confidence that the UPA would be able to effectively curb the rising prices of essential commodities and inflation by the coming rabi season.
“Difficult times are about to get over,” he said amid a thunderous applause.
With inflation emerging as a key issue in the assembly elections in Haryana, Singh attributed it to the steep hike in prices of essential commodities in the international market, a weak monsoon as well as a sharp increase in the price that government agencies offer to buy foodgrains from farmers.