Government extends interest subsidy on short-term crop loans
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New Delhi: Farmers will continue to get short-term loans of up to Rs3 lakh at a subsidised interest rate of 7%, and prompt repayers will get it at 4% as the government on Wednesday extended the subsidy to banks for 2017-18.
The Interest Subvention Scheme for 2017-18 has been approved in a Cabinet meeting headed by Prime Minister Narendra Modi.
“The Cabinet has approved the total expenditure of Rs 20,339 crore in the current financial year as interest subsidy on short-term crop loans,” a senior government official said.
The short-term crop loan of up to Rs3 lakh will continue to be made available to the prompt payee farmers at 4% interest rate only, the official said.
As an interim measure, the Reserve Bank last month had asked the banks to continue giving the discount on interest on short-term crop loans during the current fiscal.
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.
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Uttar Pradesh and Maharashtra have already announced such waivers.
Under the scheme, a subvention of 2% per annum is provided for short-term crop loan of up to Rs3,00,000 per farmer, provided the 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 “prompt payee farmers”.
For 2017-18, the target of agriculture credit has been raised to Rs10 trillion, from Rs9 trillion in 2016-17.