Govt likely to clear farm loan scheme expansion today

The government is expected to clear a proposal to expand the scheme that provides a subsidy on the interest farmers pay on short-term agricultural loans at a Cabinet meeting tomorrow.

Other proposals up for approval include that for Petroleum, Chemicals and Petrochemicals Investment Regions, which will be spread over 250 sq km.

The Cabinet is also scheduled to officially repeal the Foreign Exchange Regulation Act, long after it was functionally replaced by the Foreign Exchange Management Act. Further, it will consider the setting up of a National Judicial Council to look into problems related to the judiciary.

A 2 per cent subvention is being provided by commercial banks and regional rural banks on all agricultural crop loans of up to Rs 3 lakh, on which the government will spend nearly Rs 1,600 crore.

The government now proposes to include cooperative banks in its purview, a move which will increase the subsidy burden by a net Rs 350 crore.

Sources said this resulted from Agriculture Minister Sharad Pawar's intervention following state governments' refusal to chip in with subsidy for cooperative banks.

The petrochem investment region plan, a senior official in the Ministry of Chemicals and Petrochemicals said, would create infrastructure for petroleum, chemical and related industries. Once cleared, it would be shortly followed by a notification.

The proposed regions would not enjoy any tax incentives, as provided to special economic zones. However, states would be able to allocate land for SEZs within the region, which would provide tax incentives to units under Section 80 (IA) of the Income-Tax Act.

So far five states, including Orissa, West Bengal, Gujarat, Karnataka, and Andhra Pradesh have come forward to set up these zones by identifying locations in their territories.

The places selected include Dahej, Mangalore, Paradip, Haldia, and Visakhapatnam.