Under pressure by a string of recent farm loans waiver announcements by Congress ruled states of Madhya Pradesh, Rajasthan and Chhattisgarh, the Narendra Modi government at the Centre is looking at several options to address farmers' distress ahead of the 2019 general elections, including considering waiving interest on crop loans for farmers who pay on time.
The move could cost an additional burden of Rs 15,000 crore to the state's exchequer.
As per existing norms, farmers have to pay four per cent interest rate on the repayment of their loan if it is paid within the due date. There is also a proposal to completely waive the premium for taking insurance policy for food crops or keep it at a nominal charge of Re 1 per acre. The premium on horticultural crops could also be reduced drastically, sources in the know said.
There is also talk in government circles of giving a straightjacket relief package to give relief to the farmers who have suffered financial losses because of selling their produce at lower prices than the minimum support price (MSP) declared by the government.
However, this option is going through serious reconsideration as it could cost dearly to the government exchequer, sources said. The step may take more than expected time as it would need to cross several hurdles before being implementation-ready.
Another viable option could be to give farmers, who own land, one time grant between Rs 1,500 to Rs 1,800 per acre. It would again cost a fortune to the government, but could still be manageable, sources added.
Sources said talks are on with the Reserve Bank of India (RBI) to ease certain norms to allow the much needed liquidity for some of these options as they require hefty amount of money.
A decision is likely to be taken by Prime Minister Narendra Modi after speaking to the chief ministers of certain key BJP-ruled states as many have implemented their own schemes on the issue.
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