TN wants interest subvention scheme to continue

Tamil Nadu government has said that the Centre should continue with the interest subvention scheme for farmers even as it works on certain proposals for a more effective farm credit scheme.
It has suggested that the central government discuss certain proposals on a different mechanism at the National Development Council or NITI Aayog.
In a letter to Prime Minister Narendra Modi, Chief Minister Jayalalithaa said it is learnt that the Centre was contemplating two major changes in the interest subvention scheme for crop loans.
One of them was to allow banks to lend at normal priority sector lending rates linked to the base rate while the other one was to switch over to disbursing interest subvention on Direct Benefit Transfer (DBT) based reimbursement after the farmer settled his liabilities to the lending institutions.

The existing model included releasing the interest subvention to the banks based on their lending performance, she said in a letter to Modi on Saturday.
"Considering the uncertainty endemic to agriculture, any significant increase in the present lending rates by linking them to the base rate, or any reduction in the concessionality of farm loans is uncalled for and will be a retrograde measure," she said.
Further, the change in procedure which expects the farmer to pay higher interest rates and then receive reimbursement of the interest subvention component through DBT would "only needlessly add to the complexity of the scheme and compound the misery of the farmers," she said, adding, the proposals required detailed deliberation with stakeholders.