In a move to reach out to senior citizens and farmers, the Modi Government on Tuesday cleared a pension scheme with assured eight per cent interest for ten years irrespective of market conditions, and a crop loan interest waiver for November and December.
The pension scheme will be implemented through the life Insurance Corporation of India under which the lIC will provide a guaranteed return of eight per cent for ten years. The scheme will be implemented during the current financial year to provide social security and protect people aged 60 years and above against any fall in their interest income due to uncertain market conditions.
As per an official statement, the Union Cabinet gave its post-facto approval for launching of the Varishtha Pension Bima Yojana 2017 (VPBY 2017).
“The scheme will provide an assured pension based on a guaranteed rate of return of eight per cent per annum for ten years, with a choice to opt for pension on a monthly, quarterly, half-yearly or annual basis,” it said.
It also said that the differential return – the difference between the return generated by lIC and the assured return of eight per cent per annum - would be borne by the Government as subsidy on an annual basis.
“VPBY-2017 is proposed to be open for subscription for a period of one year from the date of launch,” said the statement, adding that the scheme is part of the Government’s commitment for financial inclusion and social security.
Meanwhile, in a major relief to farmers reeling under a cash crunch on account of demonetisation, the Cabinet gave its ex-post facto approval to waive interest for the months of November and December 2016. The interest pertains to short-term crop loans from Cooperative Banks. The total amount will be around Rs 660.50 crore.
“Farmers in the whole of India availing short-term crop loans from Cooperative Banks will be benefitted. The decision intends to ensure availability of resources with Cooperative Banks to help farmers in easily accessing crop loans to overcome the difficulties in view of the reduction in availability of cash for carrying out Rabi operations,” said a Government statement.
“A sum of Rs 15,000 crore allocated during 2016-17 to implement the Interest Subvention Scheme (ISS) has already been utilized,” said the statement.
Officials say that the farmers who have paid interest on short-term loans during the demonetisation period of November and December 2016 will get the refund in their bank accounts through Direct Benefit Transfer.
The Government provides short-term crop loans up to Rs 3 lakh at subvented interest rate of 7 per cent per annum. An additional incentive of 3 per cent is provided to farmers for prompt repayment of loans within due date.
For 2016-17, the Government had set a target to disburse farm credit of Rs 9 lakh crore, of which Rs 7.56 lakh crore had been disbursed to farmers till September 2016, official data revealed.