The absence of mention of the interest subvention on short-term crop loans in the Union Budget has created concern among the farming community. The scheme has been a huge relief for small-scale farmers across the State over the years in overcoming the uncertainties that are a mainstay in the sector.
The interest subvention scheme was introduced in 2006-07 for short-term crop loans up to Rs. 3 lakh. Under the scheme, agriculture loans are provided by banks at an interest rate of seven per cent.
The facility has been found to be beneficial with an additional interest subvention being provided for farmers since 2009-10 for those who repay their loans within a year.
While an additional subvention of one per cent was initially provided, the assistance was subsequently increased to two per cent in 2010-11.
It was further hiked to three per cent during the following fiscal and had been maintained until 2014-15. By way of the scheme, farmers are required to repay the loans at an effective interest rate of only four per cent in the case of timely repayment.
Kuttanad Vikasana Samithy executive director Thomas Peelianickal said while the governments had renewed the scheme annually since its launch, there had not been any similar mention in the Union Budget for 2015-16. “This has paved way for widespread concern among the farmers and confusion among the banking institutions. With the Union government preferring to bring down its burden of subsidies, there is apprehension that the farmers could also suffer in this regard,” he said.
According to him, the loan facility has been immensely popular with the farming community who ensure timely repayment to avail the additional interest subvention. As a result, the number of defaulters had always been very low and it had encouraged the banks to promote the scheme. The feature had gradually created fiscal discipline among the farmers, he said.
