UP to provide crop loan at 3% interest rate

To boost agricultural production in Uttar Pradesh and provide respite to small farmers, the state government today decided to provide crop loan at 3 per cent interest rate through the Primary Agricultural Cooperative Societies (PACS).

This decision, taken at the state cabinet meeting chaired by Chief Minister Mayawati, is expected to benefit millions of farmers.

The government is confident that following this step, the total loan disbursal through PACS would touch Rs 4,000 crore this year, which would be 23 per cent or Rs 737 crore higher than last year. PACS provides loans to farmers by enrolling them as members.

During 2011-12, crop loan up to Rs 3 lakh would be available to farmers at 7 per cent interest rate in the cooperatives sector.

However, farmers, who repay the loan timely, would get interest subsidy of 3 per cent and one per cent from the Centre and state respectively, which would ease the effective rate to 3 per cent.

For providing cheap crop loan to farmers, a three-tier cooperatives structure is already functioning in UP. At the panchayat, district and state levels, PACS, district cooperative banks and UP Cooperative Bank functions respectively.

Meanwhile, the government feels this decision would encourage more farmers to avail of credit facilities and thus additional funds would be required for subsidy.

This financial year, this amount has been pegged at Rs 10 crore, which would be met through budgetary allocation next fiscal.

In current fiscal, budgetary provision worth Rs 42 crore in interest subsidy has been made.