Mumbai: Chief minister Uddhav Thackeray on Monday wrote to union agriculture minister Narendra Singh Tomar urging the Centre to restore the 2% interest subvention scheme for farmers, which was stopped at the beginning of the current financial year. Thackeray said that the measure was required to protect the interest of farmers and added that the discontinuation of the scheme was likely to impact 70 lakh farmers in Maharashtra.
The issue was discussed in the state-level bankers’ committee (SLBC) meeting on Monday and the decision to write to the Centre was taken. Thackeray in the meeting said, “The Centre in its decision to discontinue interest subvention scheme did not think about the farmer’s welfare. The stopping of the scheme has affected more than 70 lakh farmers in the state. Therefore, the Centre must restore the scheme and give relief to the common farmers and district cooperative banks.”
In the letter to Tomar, Thackeray said a circular of the farm ministry and NABARD (National Bank for Agriculture and Rural Development) earlier this year stated that the 2% interest subvention scheme for a short-term loan has been modified and it has been conveyed that the benefit of the subsidy will not be available from fiscal 2022-23.
“This (discontinuation of the scheme) will have an adverse impact on the financial position of cooperative banks and in turn, will have a serious negative impact on the distribution of short-term crop loans to the farmers of the state,” he said in the letter.
The CM further said that the interest subvention scheme was especially helpful to the Cooperative Banks which have a larger connection to the farmers. “At present, Cooperative Banks/District Central Cooperative Banks (DCCBs) in the State are offering interest rates on deposits ranging from 3% to 7.75% p.a. These banks are also required to maintain statutory reserves e.g. CRR, SLR & other financial parameters as per RBI guidelines. Considering these factors, DCCBs in the State find it difficult to lend to farmers at 7% interest without interest subvention from the Central Government,” he added.
Thackeray further said that considering all the above factors, there is an immediate need to review the decision of withdrawal of interest subvention. “I sincerely urge the Government of India that to protect the interest of farmers, the interest subvention facility which was available till the year 2021-22 may be continued further,” he added.
In order to provide short-term crop loans up to ₹3 lakh to farmers at an interest rate of 7% per annum, the central government offers interest subvention of 2% annually to banks. An additional 3% interest subvention was being provided to farmers who pay their loans promptly. For such farmers, the effective interest rate was 4%.