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Govt defers crop loan recovery, to set up fund for growers

In a major debt relief to drought-hit farmers, Prime Minister Atal Bihari Vajpayee on Wednesday announced that the government will not recover crop loans this year and set up a Rs 500 crore (Rs 5 billion) corpus to help plantation growers.

"Considering the gravity of the situation, I have decided to give direct relief to the farmers from payment of crop loans extended to them," Vajpayee said in a statement.

"The government has, therefore, decided not to effect any recovery of crop loan, including interest, during the current financial year. This benefit will cover farmers in the affected areas, including plantation sector," he said.

Vajpayee said the Rs 5 billion corpus, being created with a substantial contribution from the Centre, would be used for providing relief to growers during depressed market conditions. The details of the scheme would be finalized shortly in consultation with the finance ministry.

The prime minister's announcement came ahead of the crucial meeting of the Task Force headed by Deputy Prime Minister L K Advani which is expected to decide further release of funds and foodgrains to the drought-hit states.

The Centre has already released Rs 1,186 crore (Rs 11.86 billion) under Calamity Relief Fund to 14 affected states apart from 1.325 million tonnes of foodgrains worth Rs 1,500 crore (Rs 15 billion).

Vajpayee also assured that modernisation of the processing industry in the plantation sector would get full support from the Centre and said repayment of loans given to coffee growers were being rescheduled up to a maximum of 11 years.

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