Odisha Government Launches Interest-Free Crop Loans Up to Rs 1 Lakh to Boost Agricultural Growth

In a significant move to support the agricultural community and boost productivity, the Odisha State Cooperation Department announced the implementation of the State Sector Scheme "Interest Subsidy-Subvention." The State Cabinet has approved a provision of Rs 5700 crore for this scheme, aimed at ensuring adequate credit flow in agriculture at an affordable rate of interest to farmers in the State over five years from 2023-24 to 2027-28.

Under this new initiative, the state government has taken the remarkable step of providing interest-free crop loans up to Rs 1 lakh per annum, effective from 1st April 2022. Previously, farmers were granted interest-free crop loans up to the limit of Rs. 50,000 under the KALIA scheme. The enhanced loan limit is expected to ease the financial burden on small and marginal farmers and enable them to invest more in their agricultural operations.

For farmers seeking crop loans above Rs 1 lakh and up to Rs 3 lakh, a nominal interest rate of 2 percent will be applicable, provided they make prompt repayments. This step is aimed at promoting financial discipline among farmers while ensuring that they have access to affordable credit for their farming needs.

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In the fiscal year 2022-23, more than 32.43 lakh small and marginal farmers obtained crop loans from Cooperative Banks and Primary Agricultural Cooperative Societies (PACS) up to the Rs. 1 lakh threshold, benefiting from a zero percent interest rate.

To support the Cooperative Banks and PACS in providing interest-free loans, the Government of Odisha will provide interest subsidy/subvention, compensating for any losses incurred due to directed rates of interest stipulated by the Government.

The state of Odisha operates a three-tier "Short Term Cooperative Credit Structure (STCCS)," with the Odisha State Cooperative Bank at the Apex (State) level, 17 Central Cooperative Banks at the Middle rung (District level), and 2710 Primary Agricultural Cooperative Societies (PACS) and Large-Sized Adivasi Multipurpose Cooperative Societies (LAMPCS) at the grassroots level. These institutions play a crucial role in disbursing agricultural credit, with the Cooperative sector providing about 55 percent of the total Crop loans to farmers in the State, well above the national average of 17 percent.

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Speaking about the initiative, a government official stated, "Odisha is an Agrarian State, and the growth in agricultural production and productivity is essential for the state's overall development. The interest-free crop loan scheme and the interest subvention program aim to provide hassle-free and affordable credit to farmers, especially those with small and marginal land holdings, to enable them to invest in agricultural operations and enhance their income."

With this progressive move, the Odisha Government aims to promote agricultural development and improve the livelihoods of farmers in the State. Access to affordable and hassle-free credit is expected to encourage farmers to adopt modern farming techniques, leading to increased production, higher productivity, and ultimately, a thriving agricultural sector.

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