The Hindu Business Line : Farmers yet to get benefits of lower interest

RAJARAM Choudhary, a farmer in Dhudiya village near Indore in Madhya Pradesh, regularly avails himself of crop loans to sow soyabean and wheat. Though he takes the loan from co-operative banks, he is not happy with the rate of interest.

"The high rate of interest is something that is affecting us badly," he says.

This year, during the kharif season, he got a crop loan of Rs 50,000 at an interest rate of 13 per cent. This, he says, is despite the Centre announcing that farmers could avail themselves of crop loans up to Rs 50,000 at nine per cent interest.

"No co-operative bank is ready to offer us crop loans at that interest. No doubt, they have reduced the interest by 2 percentage points this year but it is still higher than what the Union Government has announced," farmers complain in general.

Concerned over high interest rates for farming, the Government, during the kharif season, announced a lower interest regime.

The Union Finance Minister, Mr Jaswant Singh, while addressing the third Maharashtra Expo at Aurangabad on December 14, had said crop loans should be extended at an interest rate below nine per cent. He also said farmers should be given the benefit of lower interest regime when banks were cutting interest rates for home and vehicle loans.

"We have been raising the issue of the double digit interest rate in vain," some farmers say.

When contacted, Mr Ambaram Varma, President of Dhudiya branch of the Indore Premier Co-operative Bank, said: "We can extend loans to farmers at nine per cent as announced by the Centre only if we are given money at a lower rate. When we are allocated amounts at 11 per cent interest, we can give loans only at 13 per interest as we have to take care of our overheads."

"Only nationalised banks seem to provide crop loans at lower interest. But we have to undergo a lot of procedural hassles and it takes time. In the case of co-operatives, we don't face much of a problem," Chaudhary said.

But Govind Jha Patel, a cotton farmer of Sirlay village in Khargone district of Madhya Pradesh, said he had got a crop loan from a nationalised bank at 10 per cent. "I had to spend some additional energy to get the loan," he said.

Till this report went to print, the Reserve Bank of India did not provide a reply to queries regarding the higher interest crop loans for farmers.

However, an interesting outcome of the lowering of interest rate has been that farmers have paid back their old loans with higher interest and availed themselves of new loans at lower interest.

"During October, our cooperative bank witnessed pre-closure of many loans by farmers. And they have applied for fresh loans," Mr Varma said.

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