Whether it is buying a tractor for farming, purchasing agricultural equipment, or undertaking any other major farm-related work, raising capital will now be more affordable for small and marginal farmers than before. Chief Minister Yogi Adityanath has reduced the interest rate on long-term loans provided by the Uttar Pradesh Cooperative Rural Development Bank, also known as LDB, to 6% under the Chief Minister Krishak Samriddhi Yojana.
Farmers once had to take these loans at interest rates as high as 18%. The rate was later reduced to 14% and then to around 11%. Now, farmers will get loans at an interest rate of 6%.
The 5-percentage-point reduction in the interest rate will directly affect farmers’ expenses. Consider a loan of Rs 10 lakh: at an interest rate of 11%, the simple interest for one year would be Rs 1.10 lakh. At 6%, it would be Rs 60,000. Thus, the difference in interest on the same principal amount over one year is Rs 50,000. The actual savings will vary depending on the loan tenure, installments and outstanding principal.
At the launch of the scheme, Chief Minister Yogi set a target of connecting five lakh small and marginal farmers with this loan facility over the next few years. Farmers will have access to long-term capital at low interest rates for farming and agricultural machinery. The initiative was also launched at the program by handing over loan sanction letters to five farmers.
The Chief Minister says that if the food-producing farmer is prosperous, India will be prosperous, and if the farmer prospers, India will also prosper. With this approach, the focus has been on meeting farmers’ capital requirements through low-interest loans.
The interest rate on loans provided to farmers by LDB was once as high as 18%. It was first reduced to 14% and later brought down to around 11%. Following the Chief Minister Krishak Samriddhi Yojana, it now stands at 6%. This means that compared to the earlier 18% level, the interest rate has been reduced to one-third.
Affordable long-term loans will benefit small and marginal farmers the most, as they often need to make large one-time investments in farming. Access to low-interest capital for agricultural machinery and other farming requirements will reduce their interest burden.
Through this system, Chief Minister Yogi aims to provide farmers with affordable, institutional credit for agricultural investment.
Interest on farmers’ loans reduced from 18% to 6% under the Yogi government
Chief Minister Krishak Samriddhi Yojana to provide affordable long-term loans to small and marginal farmers
Interest rate reduced from 11% to 6%, target to benefit 5 lakh farmers
Annual interest difference of Rs 50,000 on a loan of Rs 10 lakh
