India

Farmers continue to get short-term loan at 7% interest

The government on Wednesday extended the subsidy to banks for fiscal 2017-18, farmers will continue to get a short-term loan of up to Rs 3 lakh at a subsidised interest rate of 7%, and prompt repayers will get it at 4%. In the Cabinet meeting on Wednesday headed by PM Modi, the Interest Subvention Scheme for 2017-18 has been approved.

“The Cabinet has approved the total expenditure of Rs 20,339 crore in the current financial year as interest subsidy on short-term crop loans,” a senior government official said.

The short-term crop loan of up to Rs 3 lakh will continue to be made available to the prompt payee farmers at 4 per cent interest rate only, the official said. Notably, as a temporary measure, the Reserve Bank last month had asked the banks to continue giving the discount on interest on short-term crop loans during the current fiscal.

Under the scheme, a subvention of 2% per annum is provided for short-term crop loan of up to Rs 3,00,000 per farmer, provided the lending institutions make available short-term credit at the ground level at 7% per annum to farmers. An additional interest subvention of 3% per annum is available to the “prompt payee farmers”.

This subsidy comes in the wake of farmers’ agitation in various parts of India, particularly Madhya Pradesh, Maharashtra, Uttar Pradesh. However, Uttar Pradesh and Maharashtra have already announced such waiver.

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