Lok Sabha Question No. 1868 (UNSTARRED), answered on 2017-12-29
Subject: Interest Payable on Crops Loan
Ministry: FINANCE
Asked by: C.S. PUTTARAJU

Government of India Ministry of Finance Department of Financial Services

## LOK SABHA

## Unstarred Question No. 1868 To be answered on Friday, December 29, 2017/Pausha 08, 1939 (Saka)

## Interest Payable on Crops Loan

1868. SHRI C.S. PUTTA RAJU:

Will the Minister of FINANCE be pleased to state:

(a) the amount of interest payable on crops loan given to farmers;

(b) whether the Government proposes to provide three per cent grants on mid term revised loan and short term loan given to the farmers in view of frequent incidents of famine in the States;

(c) if so, the details thereof, State/UT-wise including Karnataka; and

(d) if not, the reasons therefor ?

## Answer

The Minister of State in the Ministry of Finance (Shri Shiv Pratap Shukla )

(a) to (d): Interest rates on loans have been deregulated by Reserve Bank of India (RBI) and they are now  linked  to  the  Base  Rate  fixed  by  the  banks.  However,  with  a  view  to  ensure  availability  of agriculture credit at a reduced interest rate of 7% p.a. to the farmers, the Government of India in the Department  of  Agriculture  Cooperation  and  Farmers'  Welfare  (DAC&FW)  implements  an  interest subvention  scheme  for  short  term  crop  loans  up  to  Rs.  3.00  lakh.  The  scheme  provides  interest subvention  of  2%  per  annum  to  Banks  on  use  of  their  own  resources.    Besides,  additional  3% incentive is given to the farmers for prompt repayment of the loan, thereby reducing the effective rate of interest to 4%.

Under  the  extant  Interest  Subvention  Scheme  of  the  Government,  in  order  to  provide  relief  to  the farmers on occurrence of natural calamities, the interest subvention of 2% will continue to be available to banks for the first year on the restructured amount.

Further, to reduce the debt burden of farmers, the following major initiatives have been taken:

-  Reserve Bank of India has issued  directions for Relief  Measures to be provided  by  respective lending institutions in areas affected by natural calamities which, inter alia, include, restructuring/rescheduling  of  existing  crop  loans  and  term  loans,  extending  fresh  loans,  relaxed security  and  margin  norms,  moratorium,  etc.  These  directions  have  been  so  designed  that  the moment calamity is declared by the concerned District Authorities they are automatically set in motion without any intervention, thus saving precious time. The benchmark for initiating relief measures by banks  has  also  been  reduced  to  33%  crop  loss  in  line  with  the  National  Disaster  Management Framework.
-  Pradhan Mantri Fasal Bima Yojana (PMFBY) provides a comprehensive insurance cover against failure  of  insured  crops  due  to  non-preventable  natural  risks,  thus  providing  financial  support  to farmers  suffering  crop  loss/  damage  arising  out  of  unforeseen  events;  stabilizing  the  income  of farmers  to  ensure  their  continuance  in  farming;  and  encouraging  them  to  adopt  innovative  and modern agricultural practices. For development of agriculture and welfare of farmers of the country, the Government in DAC&FW, is implementing various Central Sector/ Centrally Sponsored Schemes, which include:
- (i) Rashtriya Krishi Vikas Yojana (RKVY)
- (ii) National Food Security Mission (NFSM)
- (iii) National Agriculture Market (e-NAM)
- (iv) National Mission For Sustainable Agriculture (NMSA)