Centre asks RBI to work out relief pacakge for farming loans

Patiala, Sep 26 (UNI) The Centre has asked Reserve Bank of India (RBI) to work out the relief package for the rural agriculture loans, Union Finance Minister of state Pawan Kumar Bansal said here today.

Talking to news persons here today, he said that Finance Minister P Chidambaram and Agriculture Minister Sharad Pawar held discussions with the Chief Ministers and the representatives of Haryana, Uttar Pradesh, Orissa, Madhya Pradesh, Rajasthan, Andhra Pradesh, Maharashtra and Karnataka over the issue..

He said the issue also received attention at Chief Minister's conclave held recently at Nanital.

Mr Bansal, while commenting on the Punjab Government's declaration of the one-time settlement of agriculture loans, said the Centre had been considering this proposal seriously and had asked the RBI to work out a combined solution regarding agricultural loans given by both commercial and private banks.

Punjab Chief Minister Capt Amarinder Singh had announced to allow a One Time Settlement (OTS) of agricultural loans of Cooperative banks to all the farmers who have paid 100 per cent or more of their principal loan amount.

This would provide a relief of Rs 211 crore to the farmers in the state. The Interest rate on crop loans had already been reduced from 14 per cent to 7 per cent.

The total institutional debt of Punjab farmers was estimated to be Rs 13400 crore as on March 31, 2004 that represents 41.4 per cent of NSDP from agriculture and allied activities. The total borrowings of farmers from the commission agents/money-lenders were estimated to be Rs 12000 crore.

The total burden of debt on farmers is thus estimated to be Rs 25,400 crore as on March 31, 2004, which was more than 75 per cent of the NSDP from agriculture and allied activities.

The debt burden of the Punjab farmers had increased over the years with fall in the annual income from wheat and paddy sale while the input costs had risen by over 127 per cent during the last decade as against the increase of 51 per cent in the Minimum Support Price (MSP).

Punjab had advocated that Primary Agricultural Cooperatives (PACs) and Primary Agricultural Development Banks (PADBs) should be provided one-time assistance of Rs 198.7 crore to liquidate their losses and clean up their balance sheets.

He also pleaded that re-finance from NABARD should be provided to the cooperative banks at 2.5 per cent for at least five years and level of re-financing should be raised to 70 per cent or Rs 134 crore be provided as financial support to DCCBs to make up its losses for providing crop loan at the rate of 7 per cent per annum for the next five years.

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