What is interest Subvention Scheme & how will it help farmers?

New Delhi: Amidst massive farmer protests at various parts of the coyntry, Union Cabinet on Wednesday cleared Interest Subvention Scheme for farmers, which is set to help the farmers and is likely to bring some relief to their ordeals. What is Interest Subvention for Short term crop loans Scheme?

• Under the interest subvention scheme, the government provides to all farmers short term crop loan upto one year for loan upto Rs. 3 lakhs borrowed by them during the year 2016-17
• Farmers will thus have to effectively pay only 4% as interest. In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above
• The amount of subvention is to be calculated on the amount of crop loan from the date of disbursement up to the date of repayment

Interest subvention for post harvest loans In order to give relief to small and marginal farmers who would have to borrow at 9% for the post harvest storage of their produce, the Central Government has approved an interest subvention of 2% i.e an effective interest rate of 7% for loans upto 6 months Interest subvention for relief to farmers affected by natural calamities To provide relief to the farmers affected by Natural Calamities, the interest subvention of 2% will be provided to Banks for the first year on the restructured amount. Interest waiver for two months (Nov-Dec 2016) for farmers accessing short term crop loans from cooperative banks Due to the cancellation of legal tender character of old Rs. 500 and Rs.1000 notes and the resulting difficulty faced by the farmers in en-cashing the cheques received against sale proceeds of their Kharif produce in the mandis; and also their constraints with adequacy of cash in carrying out Rabi operations and servicing the interest of the short term crop loans, especially in view of the restrictions imposed on Cooperative Banks, an interest waiver is being provided for a period of 2 months i.e. November & December 2016 to farmers who were disbursed crop loan from Cooperative Banks between 01.04.2016 and 30.09.2016. Farmers in the whole of India availing short term crop loans, from Cooperative Banks will be benefitted.