(a) whether the Government proposes to grant an additional three per cent interest
subsidy to farmers in deprived areas of the country whose mid term loans have been converted
to short term loans;
(b) if so, the details thereof; and
(c) if not, the reasons therefor?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) to (c): The Interest Subvention Scheme is being implemented by the Government of India
since 2006-07 to make short-term crop loans upto Rs. 3 lakh for a period of one year available
to farmers at the interest rate of 7 percent per annum. The Government of India has since
2009-10 been providing additional interest subvention to prompt payees farmers, i.e., those
who repay their loans in time. The additional subvention was 1% in 2009-10, 2% in 2010-11 and
3% in 2011-12. Further, in order to discourage distress sales, the benefit of interest
subvention was made available in the year 2011-12 to small and marginal farmers having Kisan
Credit Card for a further period of up to six months post harvest on the same rates as
available to crop loans against negotiable warehouse receipts for keeping their produce in
warehouses. The Interest subvention Scheme for the year 2011-12 has been continued in 2012-13
as well.
In order to provide relief to farmers in drought affected areas, the Government of India has
issued instructions on 17.09.2012 to banks that in cases where short term crop loans are
restructured due to drought as per RBI guidelines, the interest subvention already available
for short term crop loans will continue to be available for the current financial year on the
full restructured amount. Such restructured loans will attract normal rate of interest from
next financial year onward as per the policy laid down by the RBI.