Soften rates on farm loan, Pawar tells FM

NEW DELHI: As the Manmohan Singh government gears up to present the Budget for 2007-08, NCP president Sharad Pawar has upped the ante for softening the interest rates on institutional loans for farmers.

In a letter addressed to finance minister P Chidambaram, Mr Pawar, who holds the portfolios of agriculture, food and civil supplies, consumer affairs and public distribution, has sought immediate implementation of one of the most important recommendations by the MS Swaminathan-led National Commission for Farmers.

The NCP chief, in his letter, also urged the FM to shake up the banking sector so as to make it more farmer-friendly. Easy availability of credit, additional dose of debt relief measures and a network of micro-finance institutions ��� quite similar to the one in neighbouring Bangladesh, courtesy Nobel Prize winner Mohammad Yunus ��� formed part of the roadmap suggested by Mr Pawar to take the financial pressure off the farmers.

He called on the government to do the needful so that the farmers would not get into the vicious trap laid out by rapacious money-lenders.

The letter, which comes as a written response to an earlier request put out by the finance minister asking various political parties to spell out their expectations from the general Budget, was shot off last week by the NCP president. Among other things, Mr Pawar wanted personal intervention by the FM on the sensitive issue of slashing the interest rates for farmers from the existing 7% to 4%, in keeping with the Swaminathan Commission���s formulations.

The issue, over a period of time, has assumed political dimensions, with leaders cutting across party lines exerting pressure on the government to bring down interest rates on farm loans to a reasonable 4%.

It was this across-the-board demand which had earlier forced Mr Chidambaram to give up his intransigence and agree to the demand to lower the interest rates from as high as 9% to 7% in the previous Budget. The FM had expressed his reluctance to comply with the demand, arguing against the practice of governments interfering with the price mechanism of bank loans.

The agriculture minister, in his letter, also asked the government to increase the outlay on irrigation and watershed development, and ensure that the four-member expert committee on farmers��� indebtedness submitted its report without any delay.

The committee, headed by Dr R Radhakrishnan, chairman of the Mumbai-based Indira Gandhi Centre for Development and Research, was set up by Prime Minister Manmohan Singh during his visit to Vidarbha in August last to look into the problem of indebtedness and come out with measures to mitigate it. The NCP chief also sought government���s intervention in building infrastructure for the genetic upgradation of cattle so as to trigger a boom in the dairy sector.