Odisha govt seeks centre to reduce interest on farm loans

BHUBANESWAR: Chief Minister Naveen Patnaik on Friday requested Union Finance Minister Arun Jaitley to reduce the interest rate on medium term (conversion) loans on farmers facing drought situation in the state.

In a letter to Jaitley, the Chief Minister requested to extend the interest incentive of 3 percent admissible on crop loans to medium term (conversion) loans taking into account the wide spread damage caused to the standing crops due to the drought situation prevalent in Odisha.

The union government provides interest incentives 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 accounts of natural calamities, as a result of which, the interest rate on the converted loans at high level is 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 percent of interest. Similarly, the incentives made available to the prompt paying farmers of crop loans should also be extended to the medium term (conversion) loans to provide relief  to the affected farming community,” said the Chief Minister.

It is to be noted that the state government has announced a drought package for the farmers. According to the package, in case of crop damage between 33 percent and 50 percent, the crop loans shall be converted to medium term loans repayable within a period of two years with one year moratorium.

Similarly, where the crop damage is 50 percent and above, the conversion facility of the crop loan shall be allowed for a maximum period of five year with one year moratorium.