The Union Cabinet on Wednesday cleared interest subvention on short-term crop loans for the current financial year. This will enable farmers to get loans for interest as low as 4%.

For this, the exchequer’s expenditure will increase by Rs 20,339 crore.

Confirming the Cabinet approval for the expenditure, a senior official said short-term crop loans of up to Rs. 3 lakh would be made available to farmers at an interest of 7%. This means they will get a subsidy of 2%, as the usual interest rate on crop loans in 9%. Prompt payers will be able to get loans at 4%.

Farmers across the country are protesting against falling prices of their produce and mounting debts. Uttar Pradesh earlier announced waiver of crop loans; Madhya Pradesh (MP) and Maharashtra have followed.

Union Agriculture Minister Radha Mohan Singh has cancelled his visit to China, in view of the protests. Now, Agriculture Secretary S K Pattanayak will attend the BRICS summit instead of Singh.

For 2017-18, the agriculture credit target has been raised to Rs. 10 lakh crore, from Rs. 9 lakh crore in 2016-17. As an interim measure, the Reserve Bank of India had last month asked banks to continue giving discount for interest on short-term crop loans during the current fiscal year.

Experts have warned that cheaper loans would only be a temporary solution, and the farm sector needs structural reforms.

Ajay Kakra, director, agriculture and natural resources, PwC-India, said the interest subvention scheme could serve only as a good stop-gap arrangement. “However, the real relief to farmers will be through systematic structural reforms, focused on increasing income — especially for small and marginal farmers.”

The farm sector has sailed into troubled waters. Police firing on a farmer protest in Mandsaur, Madhya Pradesh (MP), last week resulted in five farmers getting killed. Another farmer died in the Badwan village of the district, with locals claiming he was assaulted by the police.

Madhya Pradesh Chief Minister Shivraj Singh Chouhan visited Mandsaur on Wednesday and gave ~1 crore to the family of one of the farmers killed in police firing. The state government on Tuesday sanctioned ~1 crore each for the families of the six farmers. The sum will be provided from the Chief Minister’s Discretionary Fund.

Chouhan was accompanied by his wife Sadhna on Wednesday as he travelled to Badwan to meet the family of Ghanshyam Dhakad. He is also scheduled to visit Lodh, Nayakheda, Piplya Mandi, Barkheda Panth and Budha villages to meet the families of the other dead farmers.

The stir which had gripped the state seems to have ebbed away for now, but three more farmers ended their lives since Wednesday. In the past week, the number of farmer suicides in the state reached five.

Source: http://www.business-standard.com/