Odisha urges Centre for interest reduction on farm loans

Bhubaneswar, Nov 21: Odisha Chief Minister Naveen Patnaik on Friday urged union Finance Minister Arun Jaitley to reduce the interest rate on medium term (conversion) loans for farmers facing drought situation in the state.

Patnaik, in a letter to Jaitley, requested that reduction in the interest rate and extension of the interest incentive of 3 percent admissible on crop loans to medium term (conversion) loans be considered in view of the widespread damage caused to the standing crops due to drought situation prevalent in Odisha.

With the state facing a drought situation, the Odisha government has decided to convert the crop loans advance during Kharif season as medium term (conversion) loans to mitigate the drought situation, the chief minister said.

The union government provides interest incentives at 3 percent to the promptly paying farmers in respect of crop loans. This facility, however, is not made available in case of conversion of such crop loans on accounts of natural calamities.

As a result, the interest rate on the converted loans at high-level is putting an additional financial burden on the farmers.

“As crop loans are converted into medium term loans, the interest rate should remain at the same level instead of charging higher percent of interest. Similarly, the incentives made available to the prompt paying farmers of crop loans should also be extended to the medium term (conversion) loans to provide relief to the affected farming community,” the chief minister said.

Significantly, the state government has announced a drought package for the farmers. According to the package, in case of crop damage between 33 percent and 50 percent, the crop loans shall be converted to medium-term loans repayable within a period of two years with one-year moratorium.

Similarly, where the crop damage is 50 percent and above, the conversion facility of the crop loan shall be allowed for a maximum period of five year with one-year moratorium.  (IANS)