The government on Monday decided that farmers who availed short-term crop loans at a concessional rate of 4 percent per annum and missed their repayment after March 1, can now repay by August 31 without paying any penalty.
The decision, taken by the Cabinet headed by Prime Minister Narendra Modi, to extend the loan repayment date will help farmers in avoiding traveling to banks for renewal or repayment of loans during the ongoing COVID-19 pandemic period, an official statement said.
This is the second time the repayment date has been extended. Earlier it was extended till May 31. Normally, farm loans attract an interest rate of 9 percent. But the government is providing a 2 percent interest subsidy to ensure farmers get short-term farm loans of up to Rs 3 lakh at an effective rate of 7 percent per annum.
However, the interest rate gets even lower at 4 percent to those farmers who repay their loans timely. The Cabinet decision taken will benefit these categories of farmers.
“Farmers who will repay their loan before August 31 will be levied a concessional interest rate of 4 percent, which is for prompt repayers,” agriculture minister Narendra Singh Tomar told media after the meeting.
Asked whether the extension of repayment period till August 31 means that the COVID-19 crisis will continue till that time, Tomar said, “No one in the government is an astrologer”.
“The government makes an effort to lessen the inconvenience caused to people. Earlier, we thought that the movement of people would become smooth by May 31. But we have received the feedback that there is still a problem in movement. So, we extended the deadline for loan repayment. So, there is no point linking with other things,” he said.
In the wake of the lockdown due to the COVID-19 pandemic, there have been restrictions imposed on the movement of people. Many farmers are not able to travel to bank branches for payment of their short term crop loan dues, the government said in a statement.
Moreover, due to restrictions on the movement of people, difficulty in the timely sale, receipt of payment of their products and the necessity of adhering to social distancing norms, farmers are finding it difficult to arrange the amount to be deposited for renewal and are unable to visit the banks to deposit and draw fresh loans, it said.
Tomar also said the government had borne crop loan interest subsidy of Rs 18,000 crore last fiscal and this might increase in the current year.
With regard to Kisan Credit Card (KCC), the minister said the government has provided KCC to 6.65 crore farmers at present and aims to reach out additional 2.5 to 3 crore farmers. The farm credit target for the current fiscal has been set at Rs 15 lakh crore.