The Cabinet on Wednesday approved restoring interest subvention on short-term agriculture loans to 1.5 per cent for all financial institutions.

Thus, Interest Subvention of 1.5 per cent will be provided to lending institutions (public/private sector banks, small finance banks, regional rural banks, cooperative banks and computerised primary agriculture cooperative societies directly ceded with commercial banks) for the financial year 2022-23 to 2024-25 for lending short-term agri-loans up to ₹3 lakh to the farmers.

This increase in Interest subvention support requires additional budgetary provisions of ₹34,856 crore for 2022-23 to 2024-25 under the scheme.

“The increase in interest subvention will ensure sustainability of credit flow in the agriculture sector as well as ensure financial health and viability of the lending institutions, especially regional rural banks and cooperative banks, ensuring adequate agriculture credit in rural economy,” Anurag Singh Thakur, Information and Broadcasting Minister said while briefing the media on various decision taken by the Cabinet.

Banks will be able to absorb increase in cost of funds and will be encouraged to grant loans to farmers for short-term agriculture requirements. This will lead to employment generation since short-term agri-loans are provided for all activities, including animal husbandry, dairying, poultry, and fisheries.

Farmers will continue to avail short-term agriculture credit at interest rate of four per cent per annum while repaying the loan in time

Enhancement limit hiked for ECLGS

In another decision, the Cabinet chaired by the Prime Minister, approved the enhancement in the limit of Emergency Credit Line Guarantee Scheme (ECLGS) by ₹50,000 crore from ₹4.5 lakh crore to ₹5 lakh crore, with the additional amount being earmarked exclusively for enterprises in hospitality and related sectors.

The increase has been effected due to disruptions caused by the Covid-19 pandemic on hospitality and related enterprises,

ECLGS is a continuing scheme. The additional amount of ₹ 50,000 crore would be made applicable to enterprises in hospitality and related sectors till validity of the scheme which is March 31, 2023.

The scheme is already operational and the enhancement is expected to provide much needed relief to enterprises in these sectors by incentivising lending institutions to provide additional credit of up to ₹50,000 crore at a low cost, thereby enabling these business enterprises to meet their operational liabilities and continue their businesses, Thakur said adding that loans of around ₹3.67 lakh crore have been sanctioned under ECLGS till August 5.

Other decisions

The Cabinet has also approved the widening access of the Traditional Knowledge Digital Library (TKDL) database to users, besides patent offices. The opening up of the TKDL database to users is an ambitious and forward-looking action by the government. The opening up of the TKDL is envisaged to inculcate thought and knowledge leadership through Bharatiya Gnana Parampara, under the New Education Policy 2020.

The Cabinet was also apprised of the signing of contract between the organisation for economic cooperation and development, France on behalf of the International Transport Forum and the Technology Information, Forecasting and Assessment Council (TIFAC), India to support the International Transport Forum (ITF) activities on the Indian transport sector. The contract was signed on July, 6.