Cut loan interest: Telangana farmers

Hyderabad: Lakhs of farmers who availed long-term loans from District Central Cooperative Banks in the state have been awaiting interest rebate from the government for the past 10 years. The government stopped the release of funds for the interest rebate scheme in 2008. The TS Government is not keen on giving funds for the period 2008 to 2014 on the grounds that these arrears pertain to Undivided AP. 

The TS Government released the rebate only in the first year of the formation of Telangana state and stopped payments again for the last two years causing huge loss to farmers. The farmers are now running around banks and the agriculture department offices to claim the benefit.

The interest rebate scheme was introduced to encourage farmers who repay loans promptly. The DCCBs and TS cooperative apex bank in all districts extend long-term loans to farmers for a period of five years. These loans are given at the interest rate of 12 percent per annum, which is much higher when compared with short term crop loans offered at 3 percent. However, to encourage farmers who repay loans promptly every year, the Congress Government in Undivided AP had introduced the interest rebate scheme, under which the interest rate was 6 percent on long-term loans.

However, subsequently both the State Governments stopped funds for this scheme. With this, the arrears have mounted to Rs 550 crore. Farmers opt for long term loans to purchase tractors, mechanised farm equipment, for the construction of sheds etc. The previous State Governments also extended interest rebate schemes for crop loans to encourage farmers who repay loans promptly.

For these loans, the banks offer loans at 9.5 percent interest, of which the Government came forward to bear 2.5 per cent. With this, the net interest on farmers works out to be just 7 per cent. However, the arrears have mounted to Rs 150 crore. With this, banks are imposing restrictions on crop loans to farmers under the pretext of arrears. This has resulted in banks disbursing only Rs 900 crore loans in the ongoing Rabi season, while the target prescribed was Rs 1,950 crore, forcing the farmers to depend on private money lenders for loans and falling in the debt trap. 

Agriculture minister Pocharam Srinivas Reddy said, “We have sent proposals to the finance ministry seeking release of the funds. It has been approved and the funds will be released very shortly before the ongoing fiscal ends on March 31.” However, the Government has decided to clear the arrears that accrued after the formation of TS in June 2014 in the first phase leaving the farmers who took loans between 2008 and 2014 in Undivided AP in the lurch.