The Hindu Business Line : AP move to outlaw usurious rates on farm loans

THE State Government will enact a legislation that would ban charging an interest rate of more than 12 per cent on farm loans extended by private lenders.

The Cabinet sub-committee that probed the causes for the spate of suicides by farmers in the State had recommended that the Government ensure that usurious (high) interest rates were not collected on farm loans.

In the case of farm loans extended by the banking sector, the committee said that interest rate should not be more than 5 per cent. The committee also wanted the banking sector to meet at least 70 per cent of the credit requirement of the farmers.

The sub-committee had submitted its report to the State Cabinet, which met here on Wednesday. It recommended both short-term and long-term measures for prevention of farmers' suicides.

Measures suggested related to political, economic, legislative and administrative issues. The Cabinet had accepted the recommendations.

Briefing newspersons after the Cabinet meeting, the Minister for Information, Mr Mohd Ali Shabbir, said that the departments concerned would come out with a legislation banning usurious interest rates on farm loans.

The sub-committee report recommended that the interest on farm loans should not exceed the principle amount. Auction of land and other assets should not be permitted. Harsh methods of collection of loan amounts should be discouraged. The schedule of repayment should be finalised in the Gramasabhas.

It also asked the State Government to request the Centre to raise the ceiling on disbursement of bank loans to the agricultural sector from the existing 18 per cent to 40 per cent.

The other recommendations of the committee included enhancement of the subsidy on agricultural inputs, improving the productivity of crops, completion of pending irrigation projects, establishment of major industries in rural areas, reduction of premium rates and increase of indemnity in the case of agricultural insurance and reduction of the role of middlemen in agricultural marketing.

Among the long-term measures recommended by the committee were constitution of an Agricultural Technology Mission under the Chairmanship of the Chief Minister and setting up an Agricultural Stabilisation fund with Rs 500 crore for market intervention and extension of minimum support price in case of crash in prices.

It wanted enhancement of budgetary allocations and public investment in agriculture, establishment of agro-based industries and cold storage units and stepping up of investments on agricultural research.

The committee also recommended constitution of an Agricultural Commission with experts in the filed to probe further into the whole issue of agricultural development and productivity vis-à-vis farmers suicides and submit a report within three months.

DA for Govt staff: Besides considering the sub-committee report, Mr Ali said, the State Cabinet has decided to sanction dearness allowance to Government employees and aided institutions, including universities. This will cost the State exchequer Rs 123.62 crore per annum.

The Cabinet had also decided to provide dearness relief to pensioners involving a financial commitment of Rs 203.03 crore.

The Minister said that the Cabinet had decided to sanction additional posts for the Cyberabad police and the Armed Reserve Platoons in the districts. It had also decided to abolish non-agriculture assignment tax and appoint "Vidya Volunteers" in Government schools on temporary basis.

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