Govt extends relief on farm loan interest

widespread farmers’ protests and the debt waiver of agriculture loans in Uttar Pradesh, the Union cabinet headed by Prime Minister Narendra Modi on Wednesday decided to extend the interest subsidy on short-term crop loans given to farmers in the current fiscal.

Farmers who repay the loan on time will be provided an interest subsidy of 5%.

But those who fail to repay on time will get a benefit of 2%. This move will cost the exchequer ₹20,339 crore in the current financial year. The interest subvention scheme has been an ongoing programme.

The scheme will allow farmers to avail short term crop typically for a period of one year at 4%. Besides, farmers taking a loan of up to ₹3 lakh can avail this benefit.

“This institutional credit will help in delinking 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 interest subvention scheme will allow farmers, especially those categorised as small and marginal, to access cheaper credit from banks and will provide them relief at a time when prices have been declining.

The move comes in the wake of rising pressure on the government after massive farmers’ protest.

Recently, farmers were killed in police firing in Mandsaur. Farmers have been demanding a debt waiver package and higher prices for their produce. “The interest subvention scheme will bring relief to the farmers, especially in a scenario where prices are declining,” Soumya Kanti Ghosh, chief economic adviser, State Bank of India group, told Hindustan Times.