Chief Minister Naveen Patnaik on Monday wrote a letter to Prime Minister Narendra Modi seeking his intervention to keep the interest rate on the medium-term (conversion) loans at par with the crop loans and also to extend the interest incentive of three per cent admissible on crop loans to the medium-term (conversion) loans.
Patnaik in the letter stated, “You may kindly be aware that during the current Kharif season paddy cultivation in some parts of Odisha has got affected due to drought and pest attack resulting in crop loss in those areas.”
To help the farming community suffering the crop loss, his Government has already initiated proactive measures to provide relief to the affected farmers promptly. As part of the package announced for the farming community, it has been decided to convert the crop loans advanced during Kharif, 2017 season in the affected areas as Medium Term (Conversion) loans, the Chief Minister stated.
In case of crop damage between 33 per cent and 50 per cent, the crop loans can be converted into Medium Term (Conversion) loans repayable within a period of two years with a moratorium of one year, he stated.
Similarly, where the crop damage is 50 per cent and more, the conversion facility of the crop loans can be allowed for a maximum period of five years with one year moratorium.
He further stated the Union Government provides interest incentive at three per cent to the prompt paying farmers in respect of crop loans, which is not made available in case of conversion of such crop loans in the event of occurrence of natural calamities.
As a result, the interest rate on the converted loans remains at a higher rate, which is at present 11.20 per cent. Similarly, the interest on crop loans is not subsidised as interest subvention for the same is not available, he said.
“In my opinion, when crop loans are converted in to Medium Term loans, the interest rate should remain at par with the crop loans,” the Chief Minister added.
Similarly, the incentive made available to the prompt paying farmers for crop loans should also be extended to the Medium Term (Conversion) loans to provide relief to the farmers affected due to drought and pest attack in Odisha, Patnaik stated.