Cheaper agri loans for farmers

NEW DELHI: Amid widespread farmers' protests and the debt waiver of agriculture loans in UP, the Union cabinet headed by PM Narendra Modi on Wednesday approved a scheme to make farm loans cheaper. Farmers who repay the loan on time will be provided an interest subsidy of 5%. 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 scheme will allow farmers to avail short term crop typically for a period of one year at 4% instead of 9% charged currently. Besides, farmers taking a loan of upto ₹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 scheme will bring relief to the farmers, especially in a scenario where prices are declining,” Soumya Kanti Ghosh, chief economic adviser, SBI group, told HT.