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MP Government to extend crop loans worth Rs 8,500 crore at 0% interest

18 Jul 2012 Evaluate

The Madhya Pradesh Government has decided to extend crop loans worth Rs 8,500 crore at 0% interest becoming the first and only state in the country to provide interest-free loans to farmers. The government has taken this decision with an aim to make agriculture profitable besides benefiting 30 lakh farmers of the state. Crop loan worth Rs 4,174 crore have been distributed so far this year in Kharif season. The government will also distribute Rs 1,105 crore loan and Rs 637.50 crore loan to scheduled caste farmers and tribal farmers. Besides, the departmental officers have also been directed by the Co-operative Department to extend crop loan benefit to 72 thousand forest land patta holder farmers. 

Meanwhile, for repayment of crop loans availed for Rabi and Kharif crops, the Co-operatives Department has fixed up the dates and asked 4,526 primary cooperative credit societies to encourage farmers associated with them to repay loans within prescribed time-limit. For kharif crops, farmers will be able to repay loans till March 15 while for Rabi crops till June 15 at 0% interest rate.

Earlier, the state government had levied interest at the rate of 15% to 16% for the loans available by the farmers. But keeping in the mind the interest of small farmers the interest rates were reduced to 7% in year 2006-07, 5% in the year 2008-09 and 2009-10, 3% in 2010-11 and 1% in 2011-12 year. Finally the government has now decided to extend the crop loans at 0% interest rate.

Moreover, the number of farmers availing crop loans and the quantum of short-term loans has been showing a rising trend since 2006-07 year. The state government has also witnessed considerable increase in recovery of loans. During year 2006-07, District bank’s recovery stood at 68.29% which has increased to 73.88% in 2011-12.

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