The Union Cabinet has approved the interest subsidy of five per cent for farmers for the year 2016-17. It will help farmers to get short term crop loan upto 3 lakh rupees payable at 4 per cent of interest rate within one year. In case farmers do not repay the short term crop loan on time they would be eligible for interest subvention of 2 per cent as against 5 per cent.<br/><br/>The government has earmarked a 18 thousand 276 crore rupees for the Interest Subvention Scheme. An interest subsidy of 2 per cent has also been cleared for loans upto six months for small and marginal farmers who would have to borrow at 9 per cent for the post harvest storage of their produce.<br/><br/>For farmers affected by Natural Calamities, the interest subvention of 2 per cent will be provided to Banks for the first year on the restructured amount.