The Agriculture Ministry has moved a Cabinet note on extending a 3 per cent interest subvention scheme to banks for the current fiscal...
The Agriculture Ministry has moved a Cabinet note on extending a 3 per cent interest subvention scheme to banks for the current fiscal to ensure that farmers get short-term crop loans of up to Rs 3 lakh at 7 per cent interest.
It is also seeking various ministries’ comments on extending an additional subvention of three per cent for those who pay loans on time this year.
Under the interest subvention scheme, farmers get the short-term loan of up to Rs 3 lakh for a period of one year at an interest rate of 7 per cent. Those repaying on time get the loan at 4 per cent.
“The proposal has been circulated for inter-ministerial comments. The Agriculture Ministry has proposed extension of the current interest subvention of 3 per cent for short term loan for the 2016-17 fiscal,” a source said.
The interest subvention scheme was earlier implemented by the Finance Ministry. It was transferred to the Agriculture Ministry this year.
In this year’s Budget, the government has increased the agri-credit target to Rs 9 lakh crore and has allocated Rs 15,000 crore for interest subsidy in the current fiscal.
Initially, the Agriculture Ministry was looking at tweaking the scheme taking into account the key recommendations of the Sarangi Committee, which had suggested various reforms for better targeting of this programme.
The ministry is, however, planning to take into account the committee’s suggestions in the next fiscal, sources added.