New Delhi : Citing disruption of economy of farmers due to the demonetisation, the Union Cabinet on Tuesday granted the interest waiver for two months of November and December to those availing short-term crop loans from the cooperative banks, and further extended the interest subvention to the National Bank for Agricultural and Rural Development (NABARD) on additional refinance to the cooperative banks.
An official press note left no doubt that it will also benefit the farmers in the poll-bound states, notwithstanding a bar under the model code of conduct, as it says: “Farmers in the whole of India availing short term crop loans, from cooperative banks will be benefitted.”
It said, the decision will ensure availability of resources with cooperative banks to help farmers access the crop loans to overcome the difficulties in view of the reduction in availability of cash for carrying out Rabi operations.
The BJP sources insisted that there was no violation of the model code since both interest waiver to farmers on crop loan and interest subsidy for rural housing were already announced by Prime Minister Modi in his December 31 address to nation. Implementation of the announcements does not violate the model code.
The press note said the 2-month interest waiver is for farmers who got crop loan from th cooperative banks between April 1 and September 30 last year. It said the Cabinet felt it necessary as “due to the cancellation of legal tender character of old Rs. 500 and Rs.1000 notes and the resulting difficulty faced by the farmers in en-cashing the cheques received against sale proceeds of their Kharif produce in the mandis; and also their constraints with adequacy of cash in carrying out Rabi operations and servicing the interest of the short term crop loans, especially in view of the restrictions imposed on the cooperative banks.”
The government will provide additional financial aid of Rs 1050 crore to NABARD to refinance the cooperative banks on account of the two-month interest waiver, stressing that the banks are supposed to extend the same to the farmers. This is in addition to Rs 15,000 crore already allocated during 2016-17 to implement the Interest Subvention Scheme (ISS) that have been already utilised.