The government has approved the interest subvention scheme for farmers for 2016-17. The Cabinet, chaired by Prime Minister Narendra Modi on Tuesday, earmarked a sum of Rs 18,276 crore for this purpose.
The scheme will help farmers getting short-term crop loan, payable within one year up to Rs 3 lakh at only 4 per cent per annum, said an official press release. The salient features of the scheme are as follows:
- a) The government will provide interest subvention of 5 per cent per annum to all farmers for short-term crop loan up to one year for loan up to Rs 3 lakh borrowed by them during 2016-17. Farmers will thus have to effectively pay only 4 per cent as interest. In case farmers do not repay the short-term crop loan in time they would be eligible for interest subvention of 2 per cent as against 5 per cent available above.
- b) The government will give approximately Rs 18,276 crore as interest subvention for 2016-17.
- c) In order to give relief to small and marginal farmers who would have to borrow at 9 per cent for the post harvest storage of their produce, the government has approved an interest subvention of 2 per cent, i.e. an effective interest rate of 7 per cent for loans up to 6 months.
- d) To provide relief to the farmers affected by natural calamities, the interest subvention of 2 per cent will be provided to banks for the first year on the restructured amount.