To provide relief to farmers affected by demonetisation, the Cabinet on Tuesday approved waiver of around Rs 660-crore interest on short-term crop loans for the November-December 2016 period. It also provided Rs 400 crore to NABARD to meet the refinancing cost of cooperative banks. The Cabinet also approved the launch of the Varishtha Pension Bima Yojana 2017 for senior citizens and granted IIMs the status of Institutions of National Importance, which will enable them to provide degrees to students.
As per the proposal, farmers who have already paid interest on short-term crop loans for the above-mentioned period will get refunds in their bank accounts. The government provides short-term crop loans of up to Rs 3 lakh at a subvented interest rate of 7% per annum.
An additional incentive of 3% is provided to those who repay loans within due date. In a release, the government took cognizance of the fact that farmers faced problems in encashing cheques received against the sale of kharif produce and there were constraints with adequacy of cash in carrying out rabi operations. While the kharif cropping season runs through July-October, the rabi cropping season starts in October and ends in March. The government stated the waiver is provided as farmers faced problems given the restrictions imposed on co-operative banks after demonetisation.
For the current fiscal, the government has set a target to disburse agricultural credit of Rs 9 lakh crore through public sector banks, regional rural banks and cooperative banks, of which Rs 7.56 lakh crore has been disbursed to farmers till September, 2016, according to official data.
On providing funds for refinancing, the government said, “The decision intends to ensure availability of resources with cooperative banks help farmers in easily accessing crop loans from cooperative banks to overcome the difficulties in view of the reduction in availability of cash for carrying out rabi operations.”
A provision of additional Rs 1,060.50 crore has been made to meet the cost of interest waiver for two months (November and December, 2016) for crop loan disbursed by cooperative banks between April 1, 2016 and September 30, 2016 and provide interest subvention and administrative cost to Nabard on short-term borrowing. Besides, the Cabinet also permitted NABARD to raise about Rs 20,000 crore from the market for on-lending to cooperative banks at 4.5% interest with an aim to provide cheaper crop loans to farmers. “In the light of good monsoon and expectation of increased credit demand and in order to boost agricultural production, the farmers need to be supported through cooperative banks, which purvey credit at their doorstep, to enable them to scale up their agricultural operation,” the official statement said.
In another decision, to safeguard senior citizens against fall in bank interest rate in the future, the Cabinet approved the launch of Varishtha Pension Bima Yojana 2017 (VPBY). The scheme will be implemented through LIC during the current fiscal to provide social security during old age and protect elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions.
The scheme will provide an assured pension based on a guaranteed rate of return of 8% per annum for 10 years, with an option to opt for pension on a monthly, quarterly, half-yearly and annual basis. The difference or gap between the return generated by LIC and the assured return of 8% per annum would be borne by the Centre as subsidy on an annual basis.
The country’s coveted IIMs will now be able to provide degrees, instead of diplomas, and PhDs to students as the Cabinet approved the Indian Institute of Management Bill, 2017. The Bill will be introduced in the coming budget session.