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Food and Consumer Affairs Minister Mr K V Thomas on Friday said he has petitioned the Finance Ministry to extend the 4 per cent subsidised interest rate on crop loans for post-harvest management also.
“I understand that availability of finance for farmers, particularly small and marginal ones, at around 11 per cent rate of interest is creating hardship for them. I have already taken up this issue with the Finance Ministry,” Mr Thomas said at a global conference organised by industry body Assocham here.
At present, farmers are availing a concessional 4 per cent interest rate on crop loans for inputs, that is, to handle pre-harvest operations. However, for post-harvest operations, farmers are getting crop loans at a higher interest rate of 11 per cent.
“I am confident that in due course, efforts would be made to get crop loan facilities at a concessional rate for post-harvest management as well,” Mr Thomas said.
Loans at concessional interest rate for post-harvest activities would incentivise farmers to store their produce in designated warehouses at the cheapest available rate of interest, he said.
In the 2011-12 Budget speech, Finance Minister Mr Pranab Mukherjee raised the additional interest subvention on short-term loans to make the rate of interest 4 per cent for those farmers who repay their loans on time.
Currently, small farmers sell their produce immediately after harvesting the crop as they do not have the financial strength to store the produce to get a premium during the off season.
Mr Thomas said the recent launch of negotiable warehouse receipts would certainly go a long way toward solving the credit problems faced by Indian farmers.
Negotiable warehouse receipts allow the transfer of ownership of a commodity stored in a warehouse without having to deliver the physical commodity. These receipts are issued in negotiable form, making them eligible as collateral for loans.
At present, the country has an estimated storage capacity of 107 million tonnes in both the public and private sector. Out of this, 20 million tonnes is held by private bodies.
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