New Delhi, March 30: The government today decided to release Rs 1,700 crore as interest subsidy to farmers. The interest subsidy is a relief of 2 per cent for crop loans up to Rs 1 lakh taken by farmers for the kharif and rabi season of 2005-06.

Parliamentary affairs minister Priya Ranjan Das Munshi said the decision was based on this year’s budget announcement.

The Reserve Bank of India (RBI) has already directed commercial banks to credit the relief into a borrower’s account before March 31. “It has been decided that banks may first credit the proposed relief to the farmers account before March 31, 2006 and thereafter seek reimbursement.” Nabard, too, has issued similar instructions to co-operative banks and regional rural banks (RRBs).

The Union cabinet also approved the introduction of a Constitution (amendment) bill in Parliament to ensure autonomy of co-operatives. The bill follows the controversial resignation of V. Kurien as chairman of NDDB and allegations of co-operatives not being run independently.

The amendment will give co-operatives greater autonomy and “ensure democratic, autonomous and professional functioning of co-operatives? the co-operatives, however, shall remain a state subject,” said Das Munshi.

Ore exports

The cabinet allowed state-run trading firm MMTC Limited to enter into fresh agreements with Japanese, Korean and Chinese steel mills to sell iron ore, but reduced the annual ceiling on high-grade ore exports from the Bailadila mines in Chhattisgarh.

“The cabinet today gave its approval to permit MMTC to enter into fresh long term agreements. The existing LTAs for supply of iron ore comes to an end by March 31 and the new agreements would be for a period of five years,” Das Munshi said.

Ministerial power

The cabinet doubled the financial powers of the finance and defence ministers to facilitate faster clearance of projects, particularly those related to defence acquisitions. While the defence minister can now sanction projects up to Rs 100 crore against Rs 50 crore earlier, the finance minister can now sanction projects up to Rs 200 crore against Rs 100 crore earlier.

The amendment will have provisions relating to co-operative principles, conduct of elections in time, a time limit for supersession of a managing committee and giving it uniform tenure, apart from introducing independent and professional audit.

The amendment also seeks to introduce compulsory filing of returns by co-operatives and providing provisions for offences and penalties apart from giving fundamental right to form co-operative societies.

The cabinet also decided to lower the annual ceiling for exports from the Bailadila mines to 2.7 million tonnes (mt) of lumps against 3 million tonnes (mt) and 1.81 million tonnes of fines against 3.8 mt.