Chennai: Chief minister O. Panneerselvam on Wednesday urged Prime Minister Narendra Modi not to make any changes in interest scheme for short-term crop loans for farmers without consulting state governments. In a letter to Modi, Chief Minister O. Panneerselvam said the Centre was reportedly planning to allow banks to lend at normal priority sector rate and change the method of disbursing the interest subvention to a Direct Benefit Transfer (DBT) based reimbursement model, after the farmer had settled his liabilities to lending institutions.

Pointing out to a recent circular from the Reserve Bank of India, he said it had indicated that the Union government, as an interim measure, would implement the Interest Subvention Scheme as it exists till June 30, 2015, as the modified scheme was not yet finalised. Summer cropping in Tamil Nadu was ‘limited’ and therefore the majority of farmers in the state would require loans only after June for the ‘Kuruvai’ (short-term) season and after August or September for ‘Samba’ (long-term )and other crops, he said, adding that the scheme should be continued beyond June 30.

“Any reduction in the extent of concessionality of farm loans is uncalled for and will be a retrograde measure. Given the extensive damage to standing crops caused due to unseasonal rains in many parts of the country and the recent forecast of a below normal monsoon by Indian meteorological department, any move to make farm loans less concessional will be courting disaster,” the Chief Minister warned.

Further, in the context of this ‘stressful scenario’, expecting farmers to pay a higher interest rate and then having the amount reimbursed through DBT would be ill-advised, as it would force the farmers to find cash resources to pay the higher interest dues first, he said, adding that DBT based reimbursement is not an appropriate model for farm credit. Urging the ministry concerned to reconsider any proposed changes in the interest subvention scheme, he said that the government should neither reduce the interest subvention nor mode of disbursal. He said that before making any changes in the scheme, the proposals should be discussed with the chief ministers in the National Development Council or the governing council of the NITI Aayog and a decision taken thereafter based on the consent and concurrence of the states.