Centre might waive interest on farm loans
At present, farmers have to pay four per cent interest if they repay their loans within the due date.
New Delhi: Battling the growing clamour for waiving off farm loans, there is considerable speculation that the government may waive the interest on crop loans for farmers who pay on time, costing an additional Rs 15,000 crores to the exchequer, sources said. At present, farmers have to pay four per cent interest if they repay their loans within the due date.
There is also a proposal to completely waive premiums for taking a insurance policy for food crops. The premium on horticultural crops could also be reduced, they said.
When asked about the government’s plan to announce a big farm package on Friday, law minister Ravi Shankar Prasad was non-committal in his reply, and only said: “The government is committed towards farmers’ welfare. Going forward, whatever decision is taken will be announced.”
Cornered by the Opposition, and more so after Congress president Rahul Gandhi had recently said he would not allow Prime Minister Narendra Modi to sleep till the Centre orders a farm loan waiver, the NDA government is likely to address the distress in the agricultural sector after it lost power to the
Congress in Madhya Pradesh, Rajasthan and Chhattisgarh in the recent state polls.
According to sources, several rounds of meetings have taken place at the highest level over the past few days to chalk out a plan to address difficulties faced by farmers in view of the low realisation in several crops amid the bumper production.
To provide immediate relief, one of the proposals being studied is to waive the four per cent interest on farmers repaying farm loan promptly within the due date.
Currently, farmers get short-term farm loans of up to Rs 3 lakhs at seven per cent interest.
However, the interest rate charged is only four per cent in case the farmers pay back their loans within the due date. Normally, loans are given at a nine per cent interest rate.
The Centre bears the cost of around Rs 15,000 crores annually for interest subsidies of two per cent in normal cases and five per cent in the case of prompt repayment of farm loans.
The government has set a target to give Rs 11 lakh crores in credit to farmers in the current fiscal. It extended Rs 11.69 lakh crores in credit to farmers in the last fiscal, surpassing the target of Rs 10 lakh crores.
The Pradhan Mantri Fasal Bima Yojana (PMFBY) might be altered to bring down the farmers’ premium burden by fully waiving it on food crops and reducing it a bit on horticultural crops.