Since it provides for an additional subvention of 3%, the short-term crop loans up to Rs 3 lakh is available to farmers at an interest rate of 4% if they pay the loan amount within one year. "The government has earmarked a sum of Rs 20,339 crore for this objective", an official statement said.
The interest subvention will be given to public and private banks, cooperative banks and regional rural banks on the use of own funds and to the National Bank For Agriculture and Rural Development (NABARD) for refinance to these rural and cooperative banks. Under it, farmers will get loans upto Rs 3 lakhs at seven per cent interest for six months, as in previous seasons ever since the scheme started in 2006-07.
The Cabinet decision to continue the interest subvention comes at a time when there are farmers protest in several parts of the country, more particularly in Madhya Pradesh, demanding farm loan waiver.
"#Cabinet approves Interest subvention for short term #CropLoans to farmers for the current year".
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"To provide relief to the farmers affected by natural calamities, the interest subvention of 2 per cent will be provided to banks for the first year on the restructured amount", the statement said. Under this, farmers can avail concessional crop loans of up to Rs 3 lakh at 7% interest (originally at 9%).
Through the subvention scheme, the government offers an interest subsidy of 2 per cent per annum for short-term crop loans of up to Rs 3 lakh per farmer on the condition that the lending institutions make short-term credit available at the ground level at 7 per cent to farmers. The interest subsidy provided by the Centre aims to incentivise farmers and help improve yields and production, said official sources. "This will help the farmers to sell the produce when the market is buoyant, and avoid distress sale".
An important initiative of the government is market reforms, with a view to ensuring that the farmers benefit from remunerative prices for their produce in the market. As a measure to check distress sale, post-harvest loans for storage in accredited warehouses against Negotiable Warehouse Receipts (NWRs) are available for up to 6 months for KCC-holding small and marginal farmers. The credit from institutional sources will complement all such government initiatives like Soil Health Card, Input Management, Per Drop More Crop in Pradhan Mantri Krishi Sichai Yojana (PMKSY), PMFBY, e-NAM, etc. "All short-term crop loan accounts will be Aadhaar-linked from this year", said an official, adding it will help prevent leakage and help identify beneficiaries reliably. The proposal is expected to cost the exchequer Rs 20,339 crore in 2017-18.
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