Rebate for farmers who paid off loans in time

When the UPA government first announced a Rs65,000 crore bailout for farmers who were unable to repay their loans, it seemed like a good idea.

A year down the line, while gratitude from beneficiaries has poured in, so has resentment from farmers who paid off their loans and ended up feeling gypped.

Now, as a reward for being conscientious, the agriculture ministry has decided to offer them lower interest rates for successfully closing their previous loans. “Right now, the interest rates in the agriculture sector is 7 per cent. We propose that farmers with a good track record of returning loans be given a rebate on interest rates,” said a senior official in the agriculture ministry.

“The decision was taken after we received complaints from a large number of farmers who felt they had been punished for being prompt with payments,” said a source in the ministry. “This was the first such large-scale bailout and is not likely to be repeated in a hurry. Now we want to encourage prompt repayment and this step is an incentive,” added the source.

Associations of co-operative banks, who are the main source of institutional credit for farmers, have, in any case petitioned the government to lower interest rates by two per cent. “If you want a revival in the agricultural sector, access to institutional credit should be increased and eased,” said the source. “This could be a part of a stimulus package for the agricultural sector.”