Reduce interest on crop loans: CM

BHUBANESWAR: As the scheduled commercial banks are charging higher rate of interest on rescheduled crop loans to farmers hit by drought and pest attack, the State Government on Monday urged the Centre to keep interest rate at the existing level and provide interest relief on timely repayment.Seeking Prime Minister Narendra Modi’s intervention in the matter, Chief Minister Naveen Patnaik said the interest rate on crop loans converted to medium term loans remains at a higher rate of 11.2 per cent when affected farmers are in distressed condition. Besides, they are not given the benefit of  interest subsidy which is available during normal times.

“The Union Government provides interest incentive at 3 per cent to farmers repaying their crop loan in time. However, this is not 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 11.2 per cent,” said the Chief Minister in his letter to Modi.Naveen further pointed out that the interest on crop loans is not subsidised as interest subvention of the Centre is not made available to the restructured loans.

“When crop loans are converted to medium term loans, the interest rate should remain at par with the crop loans. Similarly, the incentives made available to the prompt paying framers should also be extended to medium term (conversion) loans to provide relief to the affected farmers,” the letter said.As paddy crops in large parts of the State are affected due to drought and pest attack, the State Government has announced relief packages, which include restructuring of crop loans. Farmers are charged 1 per cent interest on crop loans upto `50,000 while the interest rate is 2 per cent for loans more than `50,000. In case of restructured loans, the farmers have to pay more than 11 times for interest only, official sources said.

In its relief package, the State Government decided to convert crop loans advanced during kharif 2017 in the affected areas to medium term loans. In case of crop loss of more that 33 per cent and less than 50 per cent, the loan is repayable within a period of 2 years with a moratorium of one year. Where the damage is more than 50 per cent, the conversion facility on crop loans is extended for a period of 5 years with one year moratorium.The State Government had taken up the issue with the Central team led by Union Minister of Agriculture Gajendra Singh Shekhawat here on Sunday.