In a desperate attempt to reduce the financial stress of the farmers in Odisha suffering from crop loss due to drought and pest attack, Chief Minister Naveen Patnaik has urged the Prime Minister Narendra Modi to keep the interest rate on the medium term (conversion) loans at par with the crop loans.
He also requested the prime minister, in a letter, to extend the interest incentive of 3% admissible on crop loans to the medium term (conversion) loans.
There is an alleged spurt in farmers' suicide after crop loss for the shortage of rainfall. Peasants in the state are also setting the crops on fire due to pest attack.
In order to help the farming community suffering from crop loss, the government has already initiated proactive measures to provide relief to the affected farmers. As a part of the package announced for the farming community, the state government has decided to convert the crop loans advanced during Kharif 2017 season in the affected areas as medium term (conversion) loans. In case of crop damage between 33% and 50%, the crop loans can be converted into medium term (conversion) loans repayable within a period of two years with a moratorium of one year. Similarly, where the crop damage is 50% and more, the conversion facility of the crop loans will be allowed for a maximum period of five years with the one-year moratorium.
The Modi government provides interest incentive at 3% to the prompt paying farmers in respect of crop loans, which is not made available in case of conversion of such crop loans in the event of occurrence of natural calamities.
As a result, the interest rate on the converted loans remains at a higher rate, which is at present 11.20%. Similarly, the interest on crop loans is not subsidised as interest subvention for the same is not available.
"In my opinion, when crop loans are converted into medium-term loans, the interest rate should remain at par with the crop loans. Similarly, the incentive made available to the prompt paying farmers for crop loans should also be extended to the medium term (conversion) loans to provide relief to the farmers affected due to drought and pest attack", Patnaik stated in the letter.