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Ahead of Maharashtra budget: Agri minister moots proposal of zero interest for farmer crop loan up to Rs 3 lakh

To avail the new crop loan, farmers have to be free of debt. The zero-interest loan would be extended to farmers who regularly repay crop loans or are non-defaulters.

By: Express News Service | Mumbai |
Updated: February 12, 2021 12:33:54 am
Mumbai: Agri minister moots proposal of zero interest for farmer crop loan up to Rs 3 lakhThe budget session in the state will commence on March 1, and the budget will be presented on March 6. (Express Photo)

The agriculture department has mooted a proposal seeking zero interest on crop loan up to Rs 3 lakh availed by farmers in Maharashtra.

Agriculture minister Dadasaheb Bhuse moved the proposal to the department of cooperation headed by cabinet minister Balasaheb Patil. Officials in the agriculture department said, “The zero interest rate on crop loan up to Rs 3 lakh would help cover a majority of small and marginal farmers within the institutional credit system. It will help farmers immensely as they will be relieved of the financial burden incurred due to the interest rate.”

The finance department is working out the finer nuances in terms of financial implications. At present, farmers availing crop loan up to Rs 1 lakh have zero interest rates. Crop loan between Rs 1 lakh and Rs 3 lakh is extended at an interest rate of two per cent.

Bhuse has recommended that zero interest rate should be extended for crop loan up to Rs 3 lakh, and that 2 per cent interest rate on crop loan between Rs 1 and Rs 3 lakh should be done away with. He has also recommended that the state government should provide 2 per cent interest convention to provide greater financial relief to farmers.

According to official data, there are 1.56 crore farmers in the state. Almost 78 per cent farmers are under the small and marginal category.

To avail the new crop loan, farmers have to be free of debt. The zero-interest loan would be extended to farmers who regularly repay crop loans or are non-defaulters.

According to Bhuse, “We have moved the proposal to provide financial help to farmers. The details will have to be worked out. And then cabinet approval.”

Ahead of the state budget 2021-22, every department shortlists new policies or plans along with financial provisions.

In December 2019, the Uddhav Thackeray-led government announced a loan waiver for farmers called Mahatma Jyotiba Phule Shetkari Karjmukti Yojna. The total expenditure estimated was Rs 21,000 crore, covering 30 lakh farmers. To date, Rs 11,999 crore has been to benefit 18.96 lakh farmers. The government has promised to provide the entire amount to cover 11.16 lakh farmers in a phased manner.

An official in the agriculture department said, “In the 2021-22 budget, we have to push for practical demands. Amidst severe financial constraints, extending huge sops to farmers is not possible. Already, two successive governments, led by BJP-Shiv Sena and Maha Vikas Aghadi between 2017 and 2019, have given a crop loan waiver. So, a third loan waiver is ruled out.”

The interest rate subvention of two per cent on crop loan to farmers up to Rs 3 lakh can be financially feasible. Moreover, zero loan also provides an additional incentive to farmers to repay the loan to avail benefits.

The budget session in the state will commence on March 1, and the budget will be presented on March 6.

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