Do not cut interest subsidy, Jayalalitha tells Modi

Tamil Nadu CM urges Centre to continue with the interest subvention scheme for farmers

Chennai: The state government on Sunday urged the Centre to continue with the interest subvention scheme for farmers and not bring in any major changes without holding detailed deliberations with the stakeholders. In a letter to Prime Minister Narendra Modi, Chief Minister J. Jayalalithaa said it is learnt the Government of India is contemplating two major changes in the interest subvention scheme for crop loans.

First, to allow banks to lend at their normal priority sector lending rates which are linked to the base rate. Second, to switch over to disbursing interest subvention on a Direct Benefit Transfer (DBT) based reimbursement after the farmer has settled his liabilities to the lending institutions, as against the present model of releasing the interest subvention to the banks based on their lending performance.

“Considering the uncertainty endemic to agriculture, any significant increase in the present lending rates by linking them to the base rate, or any reduction in the concessionality of farm loans is uncalled for and will be a retrograde measure. Further, the change in procedure, which expects the farmer to pay higher interest rates and then receive reimbursement of the interest subvention component through DBT would only needlessly add to the complexity of the scheme and compound the misery of the farmers", she said and cautioned the Centre that it would achieve nothing if the proposed changes are introduced without examining the pros and cons.

Ms Jayalalithaa has suggested the Centre to put forth the proposals before National development Council or in the Governing Council of the NITI Aayog for discussion and implement thereafter with appropriate modification on which there is a consensus.“Summer crop in Tamil Nadu was very limited and bulk of the crop loans were availed by farmers only during the south-west monsoon period commencing from June and in the north-east monsoon period later. Any further delay in taking a decision on the continuance of interest subvention for crop loans will severely affect agricultural prospects in the state, besides the rest of the country,” the Chief Minister said, once again, requesting the PM intervention to direct the continuance of the interest subvention scheme in the present form.

( Source : deccan chronicle )
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