Cabinet approves interest subvention scheme for farmers

The union cabinet which met here on Tuesday with Prime Minister Narendra Modi in the chair approved the interest subvention scheme for farmers for 2016-17.

"The government has earmarked a sum of Rs 18,276 crore for this purpose. This will help farmers getting short term crop loan payable within one year up to Rs 3 lakhs at only 4 per cent per annum," said a cabinet communique.

According to the scheme, the central government will provide interest subvention of 5 per cent per annum to all farmers for short term crop loan upto one year for loan upto Rs 3 lakh borrowed by them during 2016-17.

"Farmers will thus have to effectively pay only 4 per cent as interest. In case farmers do not repay the short term crop loan in time, they would be eligible for interest subvention of 2 per cent as against 5 per cent available above," the release added.

In order to give relief to small and marginal farmers who would have to borrow at 9 per cent for the post harvest storage of their produce, the central government has approved an interest subvention of 2 per cent i.e an effective interest rate of 7 per cent for loans upto 6 months.

To provide relief to the farmers affected by natural calamities, the interest subvention of 2 per cent will be provided to banks for the first year on the restructured amount.

--IANS

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