Interest subsidy on home, crop loans to continue

New Delhi: Finance Minister Pranab Mukherjee on Friday extended by a year the one per cent interest subvention scheme for housing sector and provided Rs 700 crore for it in the budget for 2010-11.

"I proposes to extend the interest subvention scheme for housing sector to March 2011," he said, unveiling the budget proposal in the Lok Sabha.

Under the scheme, introduced last year, home buyers get one per cent interest subsidy for banking loans up to Rs 10 lakh provided the cost of house does not exceed Rs 20 lakh.

Crop loan at 5 pc interest:

The government also announced loans at a subsidised interest rate of five per cent -- two per cent less than market rate -- for farmers who pay their dues in time.

Mukherjee said that the credit target for the agriculture sector has been increased to Rs 3,75,000 crore for the next fiscal from Rs 3,25,000 crore 2009-10.

"In the last budget, I provided an additional one per cent interest subvention as an incentive to those farmers who repay their short-term crop loan as per schedule.

"I propose to raise this subvention for timely repayment of crop loan from one per cent to two per cent for 2010-11. Thus, the effective rate of interest for such farmers will now be five per cent per annum," he said.

Farmers get short-term crop loan of up to Rs 3 lakh at seven per cent interest rate.

Mukherjee also said the Rs 71,000 crore farm loan waiver scheme, announced during 2008-09 budget, would be extended till June 2010 as it expired on December 31 2009.

The scheme, which covered four crore farmers, is on extension since June 2009 and the latest extension is on account of poor monsoon and drought-like conditions faced by farmers for most of last year.

Draft Food Security Bill:

The government will soon come out with a draft Food Security Bill.

"Draft Food Security Bill will be placed in public domain," he said unveiling the 2010-11 budget in the Lok Sabha.

The UPA in its election manifesto promised to enact Food Security Act to provide 25 kg of wheat or rice per month at Rs 3 per kg to Below Poverty Line (BPL) families.