New Delhi: Indian Prime Minister A B Vajpayee has announced a complete waiver of interest on loans for kharif cultivation in 14 draught-hit states as a onetime measure. This is likely to cost the exchequer about Rs 2,000 crore.

Vajpayee said the government had earlier deferred the current year’s interest on both the kharif crop loan and agricultural term loans, and rescheduled the payment of principal into term loans. “These were to be recovered over the next five years from small and marginal farmers and in three years from other farmers.”

The interest for one year, on both these categories of loans, amounting to Rs 6,040 crore, was deferred and staggered for recovery over several years, he said. “I have now decided to waive completely the first year’s deferred liability of interest on kharif loans, as a onetime measure.”

The farmers who had obtained kharif loans will now be entitled to an endorsement of this waiver directly from their loaning bank. Appropriate guidelines in this regard will be issued by the Reserve Bank of India.