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The Tamil Nadu government today urged the Centre to consult states before making any changes in the interest subvention scheme, considering the scheme’s high agriculture sector focus.
In a letter, Tamil Nadu chief minister has urged the Prime Minister to direct the concerned ministries to urgently reconsider any proposed changes in the interest subvention scheme.
“Neither should the level of concessionality for crop loans be reduced, nor should the mode of disbursal of interest subvention be changed to a needlessly complex DBT (direct benefit transfer) based re-imbursement mechanism as these would not be in the interest of farmers”, said chief minister O Panneerselvam
The proposals should be discussed with the state chief ministers in the National Development Council or the governing council of the NITI Aayog, and a decision should be arrived based on the consent and concurrence of the states, he said.
The chief minister quoted reports which stated the Centre was contemplating changes in the interest subvention scheme for short-term crop loans.
“The need of the hour is to ensure farmers have access to concessional credit,” he said.
Tamil Nadu government is providing a further four per cent subvention to primary agricultural cooperative societies from the state Budget, in addition to the two per cent interest subvention provided through banks and the additional three per cent subvention provided to farmers who repay promptly.
The RBI in its circular dated April 16, 2015, had indicated the Centre was considering certain changes to the interest subvention scheme. The circular stated the Centre had decided to implement the scheme as an interim measure till June 30, 2015. The Union government, however, has not yet finalised the modified scheme.
In Tamil Nadu, the summer cropping is very limited and a majority of farmers in the state access loans only after June for the Kuruvai season, followed by Samba crop and others.
Therefore, the interest subvention scheme should be continued beyond June 30, 2015, so that farmers were assured of credit during the main cropping season in Tamil Nadu, said the chief minister.
He said the Centre was contemplating two major changes in the scheme, including allowing banks to lend at their normal priority sector lending rate, which is related to their base rate, and to change the disbursing method to the DBT based reimbursement once the farmer settles liabilities to the lending institutions.
“Any reduction in the extent of concessionality of farm loans is uncalled for and would be a retrograde measure. Given the extensive damage to standing crops caused due to unseasonal rains in many parts of the country and the recent forecast of a below normal monsoon by the Indian Meteorological Department, any move to make farm loans less concessional would be disastrous,” said Pannerselvam.
According to him, expecting farmers to pay higher interest rate and then having the amount reimbursed through a DBT would be ill-advised, as it would force farmers to find cash avenues to clear the interest dues at first, he said.
“Neither should the level of concessionality for crop loans be reduced, nor should the mode of disbursal of interest subvention be changed to a needlessly complex DBT based re-imbursement mechanism as these would not be in the interest of the farmers,” he said.
In a letter, Tamil Nadu chief minister has urged the Prime Minister to direct the concerned ministries to urgently reconsider any proposed changes in the interest subvention scheme.
“Neither should the level of concessionality for crop loans be reduced, nor should the mode of disbursal of interest subvention be changed to a needlessly complex DBT (direct benefit transfer) based re-imbursement mechanism as these would not be in the interest of farmers”, said chief minister O Panneerselvam
The proposals should be discussed with the state chief ministers in the National Development Council or the governing council of the NITI Aayog, and a decision should be arrived based on the consent and concurrence of the states, he said.
The chief minister quoted reports which stated the Centre was contemplating changes in the interest subvention scheme for short-term crop loans.
“The need of the hour is to ensure farmers have access to concessional credit,” he said.
Tamil Nadu government is providing a further four per cent subvention to primary agricultural cooperative societies from the state Budget, in addition to the two per cent interest subvention provided through banks and the additional three per cent subvention provided to farmers who repay promptly.
The RBI in its circular dated April 16, 2015, had indicated the Centre was considering certain changes to the interest subvention scheme. The circular stated the Centre had decided to implement the scheme as an interim measure till June 30, 2015. The Union government, however, has not yet finalised the modified scheme.
In Tamil Nadu, the summer cropping is very limited and a majority of farmers in the state access loans only after June for the Kuruvai season, followed by Samba crop and others.
Therefore, the interest subvention scheme should be continued beyond June 30, 2015, so that farmers were assured of credit during the main cropping season in Tamil Nadu, said the chief minister.
He said the Centre was contemplating two major changes in the scheme, including allowing banks to lend at their normal priority sector lending rate, which is related to their base rate, and to change the disbursing method to the DBT based reimbursement once the farmer settles liabilities to the lending institutions.
“Any reduction in the extent of concessionality of farm loans is uncalled for and would be a retrograde measure. Given the extensive damage to standing crops caused due to unseasonal rains in many parts of the country and the recent forecast of a below normal monsoon by the Indian Meteorological Department, any move to make farm loans less concessional would be disastrous,” said Pannerselvam.
According to him, expecting farmers to pay higher interest rate and then having the amount reimbursed through a DBT would be ill-advised, as it would force farmers to find cash avenues to clear the interest dues at first, he said.
“Neither should the level of concessionality for crop loans be reduced, nor should the mode of disbursal of interest subvention be changed to a needlessly complex DBT based re-imbursement mechanism as these would not be in the interest of the farmers,” he said.
