Congress LS Whip seeks clarity on farmers loan scheme

Farmers face uncertainty over the Centre's interest subvention scheme which enabled them to avail short-term crop loans at lower interest rate, says a former Congress union minister from Kerala.
In a letter to Prime Minister Narendra Modi and Union Finance Minister Arun Jaitely, K C Venugopal, who is also the Congress Whip in Lok Sabha, said there was no word yet on whether or not the scheme, introduced by the UPA government, would be continued in the new financial year.
Venugopal, who held portfolios of power and civil aviation as a minister of state in UPA-II government, claimed that Reserve Bank of India had so far not issued necessary circular extending the operation of the scheme for 2015-16.

In the letter, he said the centre should "make clarity in the (budget) statement regarding the farmers interest subvention scheme."
He said the UPA Government had approved a scheme for providing short-term crop loans at concessional rate of seven per cent to farmers.
An additional subvention of three per cent was being provided to those farmers who repay their loans on time, thus making the effective rate of interest four per cent per annum for them.

Venugopal later told PTI that there was no clarity on the future of the scheme.
"Unfortunately the current union budget makes an ambiguous silence on the interest subvention scheme which was hugely beneficial to farmers affected by natural calamities," he said.

If the government decided to discontinue with the scheme, millions of farmers who took crop loans at affordable rates from various banks will have to pay higher interest rates in the new financial year, Venugopal said.
The Congress leader said the party would raise the issue in Parliament when it meets after the current recess.
In his letter to the Prime Minister, Venugopal said the estimated budgetary implication of the scheme for 2013-14 was Rs 15,385 crore.
Since 2009-10, the government had revised the scheme and additional interest subvention was extended to farmers who repay their loans on or before the due date or the date fixed by the bank, subject to a maximum period of one year.

He said the notification released by the RBI on interest subvention scheme on December 3, 2013 clearly mentions that "additional interest subvention at a rate of three per cent will be available to the prompt paying farmers from the date of disbursement of loan.