Govt clears interest subvention scheme for farmers

To ensure availability of loans at affordable rates for farmers, the government has approved a scheme for providing short-term crop loans at concessional rate of 7%, Information and Broadcasting Minister Manish Tewari said here today.

'This scheme has already been extended to crop loans borrowed from private sector scheduled commercial banks in respect of loans given within the service area of the branch concerned,' Tewari said in a briefing on Cabinet decisions taken yesterday.

An additional subvention of 3% is being provided to those farmers who repay their loans on time, he said, adding, the effective rate of interest for such farmers, thus, will be 4% per annum.

The estimated budgetary implication of this scheme for 2013-14 is Rs 15,385 crore, he added.

Tewari said the government will also provide interest subvention at 7% to small and marginal farmers having Kisan Credit Card loans against Negotiable Warehouse Receipts for post harvest, on the same rates as those available for crop loan, for another six months.

The estimated additional budgetary implication of this feature would be Rs 264 crore, he added.

Banks have been consistently meeting the target set for agricultural credit flow in the past years. For the year 2013-14, the target for agricultural credit flow has been raised to Rs 7 lakh crore from Rs 5.75 lakh crore in the year 2012-13.

Earlier this week, Finance Minister P Chidambaram said the short-term agriculture loan could exceed the target.

'At the beginning of the year, it was estimated that banks will provide agricultural credit of Rs 7,00,000 crore this year (as against last year's level of Rs 5,75,000 crore). However, having regard to the good monsoon and the increase in the sown area, I am asking banks to gear up to provide agricultural credit in excess of Rs 7,00,000 crore,' Chidambaram had said.