Home ECONOMY Odisha urges Centre to reduce interest on farm loans

Odisha urges Centre to reduce interest on farm loans

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Odisha Sun Times Bureau
Bhubaneswar, Nov 20:

A day after the Central government asked the affected states to submit memorandum for drought assistance, Odisha Chief Minister Naveen Patnaik today shot a letter to Union Finance Minister Arun Jaitley requesting him to reduce the interest rate on crop loans in view of the widespread crop damage due to drought situation prevalent in the state.

Naveen patnaik 5

The chief minister urged the Union minister to trim down the interest rate and extend the interest incentive of 3 percent admissible on farm loans to Medium Term (Conversion) loans considering the widespread damage caused to the standing crops due to the drought situation prevalent in Odisha.

“The Union government provides interest incentive at 3 percent to the prompt paying farmers in respect of crop loans. This facility, however, is not made available in case of conversion of such crop loans on account of natural calamities as a result of which, the interest rate on the converted loans remains at a high level putting an additional financial burden on the farmers. As crop loans are converted into Medium Term loans, the interest rate should remain at the same level instead of charging higher rate of interest. Similarly, the incentive made available to prompt paying farmers of

crop loans should also be extended to the Medium Term (Conversion) loans to provide relief to the affected farming community,” Naveen said, in the letter.

“Due to scanty and erratic rainfall, large part of Odisha has resulted in widespread damage of the standing crops. My government has already initiated proactive measures to combat the situation and to provide relief to the farming community. As part of the package announced for the farming community, we have decided to convert the crop loans advanced during Khariff, 2015 season as Medium Term (Conversion) loans. In case of crop damage between 33% and 50%, the crop loans shall be converted to Medium Term (Conversion) loans repayable within a period of two years with a moratorium of one year. Similarly, where the crop damage is 50% and more, the conversion facility of the crop loans can be allowed for a maximum period of five years with one year moratorium,” Naveen added.

Notably, over 33 percent crop loss has been reported in 139 blocks in 21 districts in the state as per government’s eye estimate reports. Following this, the government announced water cess waiver on farmers in the drought-hit areas in the state. Besides, it also announced to reschedule agricultural loans by extending the time limit for repaying crop loans.