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The government announced loans on Monday at a subsidised interest rate of six per cent for farmers who pay their dues in time, which is one per cent less than what others would get.
"I am also happy to announce that for this year the government will pay an additional subvention of one per centas an incentive to those farmers who repay their short term crop loan on schedule. Thus the interest rate for these farmers will come down to 6 per cent per annum," finance minister Pranab Mukherjee said in the Budget 2009-10.
The Centre has allocated Rs 411 crore (Rs 4.11 billion) more in this budget for this purpose over and above the allocation made during the interim Budget, he added.
Mukherjee said the governmnet would continue the interest subvention scheme on short term crop loan of up to Rs 300,000 at seven per cent interest rate.
The government also hiked the target of agricultural credit for 2009-10 to Rs 3,25,000 crore (Rs 3,250 billion) after achieving last year's target when the government had disbursed Rs 2,87,000 crore (Rs 2,870 billion) of farm loan as against the target of Rs 2,80,000 crore (Rs 2,800 billion).
Mukherjee said the debt waiver scheme, announced during 2008-09 Budget, would be extended till December 31 this year, in view of delay in monsoon. The Rs 71,000 crore scheme (Rs 710 billion), which covered 4 crore (40 million) farmers, had ended in June 2009.
He also announced setting up a task force to examine a large number of farmers in parts of Maharashtra who had been left out of this scheme as they had taken loans from private money lenders.