New Delhi: Kerala Congress (M), a UPA ally, has urged Prime Minister Manmohan Singh to provide interest- free loans to farmers to save them from debt trap and suicides.

"In order to solve the problems of farmers for investment in agriculture on a permanent basis, the interest on agricultural loans should be removed completely," Kerala Congress (M), headed by state Finance Minister K M Mani, said in its approach paper for 12th Five Year Plan submitted to the Prime Minister.

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Kerala Congress (M), whose main source of support is the farming community, is also a key ally of state`s ruling Congress-led United Democratic Front (UDF). "In the 12th Plan, steps should be taken to ensure interest-free loans to farmers," it said.

The approach paper said the primary requirement for agricultural development is making agricultural credit available at liberal terms and conditions.

"It is interest and compound interest on loans that lead to debt trap and farmer suicides," it stated.

The paper said the five per cent interest subsidy announced in the Kerala budget is a modest attempt to reduce this burden.

Observing that Kerala is lagging behind in agriculture sector, the approach paper said more attention should be paid during the 12th Plan with regard to the state. "Kerala is one of the states which exhibited worst performance at the agricultural fronts during the 11th Plan period. During the four years from 2006-07, all India average growth of agriculture sector remained positive. During the period, the rate of growth of Kerala`s agricultural sector was negative," it said.

Pointing out that almost 45 per cent of Kerala`s population is dependent on agriculture for their livelihood, the paper said that ignoring this sector goes against the long-term interest of the state.

PTI