Odisha Chief Minister Naveen Patnaik on Monday urged the Centre to reduce interest rates on agricultural loans and extend interest incentive on crop loans for the benefit of farmers affected by droughts and pests.
In a letter, the Chief Minister sought the intervention of Prime Minister Narendra Modi to keep the interest rate on medium-term (conversion) loans at par with crop loans and also extend the interest incentive of three per cent admissible on crop loans to medium-term (conversion) loans.
"In my opinion, when crop loans are converted into medium-term loans, the interest rate should remain at par with the crop loans. Similarly, the incentive made available to farmers for prompt repayment of crop loans should also be extended to medium-term (conversion) loans to provide relief to peasants affected by drought and pest attacks," said Patnaik.
He said that during the current kharif season, paddy cultivation in some parts of Odisha was affected due to drought and pest attacks, adding that his government had taken proactive measures to provide relief to the affected farmers.
"As a part of the package, it has been decided to convert crop loans advanced during 2017 kharif season in affected areas as medium-term (conversion) loans," said the Chief Minister.
In case of crop damage between 33 and 50 per cent, crop loans can be converted into medium-term (conversion) loans repayable over two years with a moratorium of one year.
Similarly, where the crop damage is 50 per cent and more, conversion of crop loans can be allowed for a maximum five years with a one-year moratorium, he said.
The Union government provides interest incentive at three per cent to farmers making prompt repayment of crop loans, which is not made available in case of conversion of such crop loans in the event of natural calamities.
"As a result, the interest rate on the converted loans remains high, which is at present 11.20 per cent. Similarly, interest on crop loans is not subsidised as interest subvention for the same is not available," said the Chief Minister.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)