The Hindu Business Line : Farm loan interest at Rs 4311 cr

Interest subsidy on farm loans will cost the exchequer Rs 4,311 crore during 2008-09. The Union Cabinet on Friday approved the release of this amount to public sector banks, regional rural banks (RRBs), cooperative banks and also to NABARD for providing refinance to RRBs and cooperative banks at concessional rate to operationalise a Budget 2008-09 announcement.

In Budget 2008-09, the Finance Minister, Mr P Chidambaram, had announced that farmers can avail short term crop loan at 7 per cent per annum with an upper limit of Rs 3 lakh in principal amount during 2008- 09. Official sources said that banks will get Rs 3,141.64 crore and Nabard would get Rs 1,169.43 crore, taking the total interest subsidy on farm loans to about Rs 4,311 crore.

The target for flow of credit to the agriculture sector has been fixed at Rs 2,80,000 crore for 2008-09. Of this, Rs 1,86,828 crore is estimated as short term production credit. While public sector banks are likely to deploy Rs 80,890 crore, RRBs and cooperative banks are estimated to deploy short term production credit of Rs 24,880 crore and Rs 58,738 crore respectively. Private sector banks are likely to deploy Rs 22,320 crore during 2008-09 as short term production credit. - Our Bureau

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