 "Jaya seeks PM's intervention in interest subvention scheme")
In a letter to the Prime Minister, she suggested that the proposed modifications may be discussed either in the National Development Council or in the governing council of the NITI Aayog and can be implemented thereafter with appropriate modifications on which there is a consensus.
The state government had earlier conveyed its concerns on the two major changes in the interest subvention scheme of crop loans - first to allow banks to lend at their normal priority sector lending rates, which are linked to the base rate, and second to switch over to disbursing interest subvention on a direct benefit transfer (DBT)-based reimbursement after the farmer has settled his liabilities to the lending institutions, as against the present model of releasing the interest subvention to the banks based on their lending performance.
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"Considering the uncertainty endemic to agriculture, any significant increase in the present lending rates by linking them to the base rate, or any reduction in the concessionality of farm loans is uncalled for and will be a retrograde measure," the chief minister said.
Further, the change in procedure, which expects the farmer to pay higher interest rates and then receive reimbursement of the interest subvention component through the DBT would only needlessly add to the complexity of the scheme and compound the misery of the farmers. In the earlier system, when the bank loans were disbursed through the farmers' accounts, the farmers enjoyed concessional credit even at the initial stage when drawing the loans, she added.
Under these circumstances, switching over to the new model of DBT at the post repayment stage directly to the farmers' accounts will not bring any significant benefit in terms of greater accuracy of targeting, accountability or timely availability of credit to the farmers. Hence, the proposed move requires detailed deliberation with stakeholders. A considered view needs to be taken only after examining the pros and cons of the proposed change in order to achieve the end objective of effective and foolproof delivery and ultimately farmers' welfare, Jayalalithaa said.
"You may also appreciate that the summer crop in Tamil Nadu is very limited and bulk of the crop loans are availed of by the farmers only during the south-west monsoon period commencing from June and in the north-east monsoon period. Any further delay in taking a decision on the continuance of interest subvention for crop loans will severely affect agricultural prospects in the State and in the rest of the country as well," she said.
Therefore, considering the utmost importance of this scheme to the farming community in all the states, Jayalalithaa again urged the prime minister's immediate intervention to direct the continuance of the interest subvention scheme in the present form while initiating the process of deliberating on the contemplated changes with the stakeholders to arrive at a more effective and supportive farm credit scheme.
"In this regard, I would also like to suggest that the proposed modifications may be discussed either in the National Development Council or in the governing council of the NITI Aayog and can be implemented thereafter with appropriate modifications on which there is a consensus," she added.
In the Centre's circular on April 10, 2015, it has been indicated that, pending the introduction of certain changes, the existing model of interest subvention scheme will continue as an interim measure till June 30, 2015, and this has now been further extended up to July 31, 2015.
The time frame indicated is fast approaching and the uncertainty regarding the continuance of the existing scheme and lack of clarity about the new procedure to be introduced will adversely impact the agriculture sector, especially when the country is facing a delay in the onset of the monsoon and an imminent risk of drought.