The Cabinet in a meeting chaired by the prime minister announced the extension of the repayment date of standard short-term loans taken by farmers up to three lakhs for agriculture and allied activities to 31st August 2020. This is applicable to loans that have become due or will become due between 1st March and 31st August 2020. The Interest Subvention (IS) rate of 2% and Prompt Repayment Incentive (PRI) will be continued to be provided.
This will come as a relief to those farmers who may have missed out on the PRI because of delayed payment. The government has said that farmers who will pay within the extended repayment date will attract 4%p.a. Interest without any penalty which will be helpful for them as they have faced restrictions due to the lockdown.
The response from the government comes due to various factors as due to lockdown the farmers have been experiencing difficulties in the sale of their crops. The lack of transport facilities coupled with the lack of demand due to closure of restaurants and hotels have added to the woes of the farmers and they have been not been able to sell their produce as quickly and efficiently as they would have in any normal year. Also, farmers who have been able to sell their crops or are in a condition to repay the loans are unable to travel to bank branches due to the lockdown. The extended date will also make sure that the farmers come to the bank branches in small numbers and adhere to social distancing measures.
In recent days the government have announced several measures for the agriculture sectors with the government also hiking the Minimum Support Price (MSP) for 14 crops like Paddy, Jowar, Maize, Bajra etc..The move will help the farmers get 50-83% more revenue than their input costs depending on the crops.
