Cabinet likely to clear interest subvention scheme for farmers

NEW DELHI: The government is likely to consider tomorrow a scheme for providing short-term crop loans at concessional rate of 7 per cent to farmers.

The Cabinet would take up the issue of interest subvention scheme implemented by public sector banks, private banks, cooperative banks, and Regional Rural Banks in its meeting tomorrow, sources said.

Under the interest subvention scheme, the government pays 2 per cent interest subsidy to banks for granting short-term crop loan to farmers at concessional rate of 7 per cent.

Finance Minister P Chidambaram in the Budget speech this year had announced that the interest subvention scheme for providing short-term crop loans to farmers at 7 per cent interest per annum will be continued in 2013-14.

"Agricultural credit is the driver of agricultural production. We will exceed the target of Rs 5,75,000 crore fixed for 2012-13. For 2013-14, I propose to increase the target to Rs 700,000 crore," he had said.

"The interest subvention scheme for short-term crop loans will be continued and a farmer who repays the loan on time will be able to get credit at 4 per cent per annum," he had said.

"So far, the scheme has been applied to loans extended by public sector banks, RRBs and cooperative banks. I propose to extend the scheme to crop loans borrowed from private sector scheduled commercial banks in respect of loans given within the service area of the branch concerned," he had said.

Besides, the Cabinet is likely to consider double tax agreement between India and Zambia for avoidance of double taxation and prevention of fiscal evasion with respect to taxes and income.