New Delhi: The Central Cabinet on Tuesday approved a proposal to extend a three percent interest subvention scheme to banks for the current fiscal to ensure farmers get short-term crop loans up to Rs 3 lakh at seven percent.
Under the interest subvention scheme, farmers get the short-term loan of up to Rs 3 lakh for a period of one year at an interest rate of 7 percent. Those repaying on time get the loan at 4 percent.
The interest subvention scheme was earlier implemented by the Finance Ministry. It was transferred to the Agriculture Ministry this year.
In this years Budget, the government has increased the agri-credit target to Rs 9 lakh crore and has allocated Rs 15,000 crore for interest subsidy in the current fiscal.
Initially, the Agriculture Ministry was looking at tweaking the scheme taking into account the key recommendations of the Sarangi Committee, which had suggested various reforms for better targeting of this programme.
The ministry is, however, planning to take into account the committees suggestions in the next fiscal, sources added.