Govt extends interest subvention on crop loans to farmers

The government has extended the interest subvention scheme to ensure availability of crop loans of up to Rs3 lakh to farmers at 7 per cent per annum. Further, the cabinet approved an additional interest subvention of 3 per cent per annum for those farmers who repay on time.

This means that a farmer who repays loans in time will be paying an annual rate of interest of just 4 per cent.

"The Union Cabinet has given its approval to continuation of interest subvention to public sector banks (PSBs), private sector commercial banks, regional rural banks (RRBs), cooperative banks and NABARD to enable them to provide short-term crop loans of up to Rs3 lakh to farmers at 7 per cent per annum during 2015-16," sources said.

Besides, the cabinet approved interest subsidy to small and marginal farmers through Kisan Credit Cards for loans against negotiable warehouse receipts post-harvest at 7 per cent per annum for six months.

The Union Cabinet, chaired by Prime Minister Narendra Modi, also decided to provide relief to farmers affected by natural calamities, where the interest subvention of 2 per cent will continue to be available to banks for the first year on the restructured amount, a cabinet release stated.

The cabinet also raised the target of agriculture credit for the current fiscal (2015-16) to Rs8,50,000 crore, from Rs8,00,000 in 2014-15.

The cabinet also approved the setting up of a central agricultural university at a cost of Rs295 crore in Samastipur district of Bihar by converting the existing state university into a national level institution. The university will have a network of colleges, research institutes and Krishi Vigyan Kendras and will help enhance agricultural productivity in the eastern region of the country.

The cabinet committee of economic affairs (CCEA), meanwhile, approved unrestricted bulk exports of rice bran oil and organic edible oils.

At present, rice bran oil has limited demand in India and exports are expected to help small rice mills. This would also encourage more investments in the high-value produce, according to the CCEA.