Interest Subvention Scheme

  • The Union Cabinet has approved the Interest Subvention Scheme (ISS) for farmers for the year 2017-18. This will help farmers getting short term crop loan up to Rs. 3 lakh payable within one year at only 4% per annum.
  • The interest subvention will be given to Public Sector Banks (PSBs), Private Sector Banks, Cooperative Banks and Regional Rural Banks (RRBs) on use of own funds and to NABARD for refinance to RRBs and Cooperative Banks.
  • The Interest Subvention Scheme will continue for one year and it will be implemented by NABARD and RBI.
  • The objective of the scheme is to make available at ground level, agricultural credit for Short Term crop loans at an affordable rate to give a boost to agricultural productivity and production in the country. 

Major Impact :   

  • Credit is a critical input in achieving high productivity and overall production in the agricultural sector.  The Cabinet’s  approval of a sum of Rs.20,339 crore to meet various obligations arising from interest subvention being provided to the farmers on short term crop loans, as also loans on post harvest storages meets an important input requirement of the farmers in the country.  This institutional credit will help in delinking the farmers from non-institutional sources of credit, where they are compelled to borrow at usurious rates of interest. 
  • Since the crop insurance under  Pradhan Mantri Fasal Bima Yojana (PMFBY) is linked to availing of crop loans, the farmers would  stand to benefit from both farmer oriented initiatives of the Government, by accessing the crop loans.
  • An important initiative of the government is  market reforms, with a view to ensuring that the farmers benefit from remunerative prices for their produce in the market.  The electronic National Agriculture Market (e-NAM) that was launched by Government on April, 2016 aims at integrating the dispersed APMCs through an electronic platform  and enable price discovery in a competitive manner, to the advantage of the farmers.  While the farmers are advised to undertake on-line trade, it is also important that they avail themselves of post-harvest loans by storing their produce in the accredited warehouses.  The loans are available to Kisan Credit Card (KCC) holding small and marginal farmers at     interest subvention of 2 per cent on such storages for a period   of upto six months.  This will help the farmers to sell when they find the market is buoyant, and avoid distress sale.  It is, therefore, needful for the small and marginal farmers to keep their KCCs alive. 
  • The Government is keen in improving income of the farmers, for which it has launched several new initiatives that encompass activities from seed to marketing.  The credit from institutional sources will complement all such government initiatives like Soil Health Card, Input Management, Per Drop More Crop in Pradhan Mantri Krishi Sichai Yojana (PMKSY), PMFBY, e-NAM, etc.

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