Chennai: Tamil Nadu government Wednesday asked the Centre to reconsider proposed changes in the interest subvention scheme for crop loans for farmers, saying such proposals should be discussed with state Chief Ministers and their consent taken.
In a letter to Prime Minister Narendra Modi, Chief Minister O Panneerselvam said Centre was reportedly planning allowing banks to lend at normal priority sector rate.
Besides, he said, it is proposing to change the method of disbursing the interest subvention to a Direct Benefit Transfer based reimbursement model, after the farmer had settled his liabilities to lending institutions.
"Any reduction in the extent of concessionality of farm loans is uncalled for and will be a retrograde measure. Given the extensive damage to standing crops caused due to unseasonal rains in many parts of the country and the recent forecast of a below normal monsoon by Indian Meteorological Department, any move to make farm loans less concessional will be courting disaster," said the Chief Minister.
Further, in the context of this 'stressful scenario', expecting farmers to pay a higher interest rate and then having the amount reimbursed through DBT would be ill-advised, as it would force the farmers to find cash resources to pay the higher interest dues first, he said.
"Hence, I request you to direct the concerned Ministries to urgently reconsider any proposed changes in the interest subvention scheme. Neither should the level of concessions for crop loans be reduced, nor should the mode of disbursal of interest subvention be changed to needlessly complex DBT based reimbursement mechanism as these would not be in the interest of the farmers," he urged.
Further, he said, before any change was made in Interest Subvention Scheme, given its importance to the farming community, the proposals should be discussed with the Chief Ministers in the National Development Council or the Governing Council of the NITI Aayog and a decision taken thereafter based on the consent and concurrence of the States, he said.
Pointing out to a recent circular from the Reserve Bank of India, he said it had indicated that the Union Government, as an interim measure, would implement the Interest Subvention Scheme as it exists till June 30, 2015 as the modified scheme was not yet finalised.
Summer cropping in Tamil Nadu was 'limited' and therefore the majority of farmers in the state would require loans only after June for the 'Kuruvai' (short-term) season and after August or September for 'Samba' (long-term )and other crops, he said, adding that the scheme should be continued beyond June 30.
