New Delhi, Dec 3 (PTI) The government today said it has no plans to reduce the rate of interest to four per cent from the current five per cent on farm loans.

In a response to a written query in Rajya Sabha, minister of state for food and agriculture K V Thomas said that the government has no proposal under consideration for reducing the interest rate to four per cent on farm loans.

The minister said in 2009-10 fiscal, government provided an additional one per cent interest subvention to those farmers who repaid their short term crop loan as per schedule.

"The government has raised this subvention for timely repayment of crop loan from one per cent to two per cent from the year 2010-11," he said while adding that thus the effective rate of interest for such farmers will be five per cent per annum. Interest subvention policy unchanged; government will not lower farm loan interest rate and has increased timely-repayment subvention. The government has no proposal to reduce the statutory interest rate on farm loans and retains the existing base rate; instead it increased the interest subvention for short-term crop loans repaid on schedule, which lowers the effective cost for timely-repaying farmers without changing the headline lending rate.