Jaipur, Jul 22 (IANS): In a major decision to push the rural economy, Rajasthan Chief Minister Ashok Kumar Gehlot has decided to provide interest-free loans of up to Rs.1 lakh to some 26 million farmers, with money drawn from cooperative societies.

"This scheme will specifically benefit small farmers and free them from the clutches of moneylenders who charge high interest rates. The money can be used to buy fertilizers, seeds, pesticide and diesel needed to raise crops," a senior official said.

"What makes the scheme even more attractive and unique is that farmers who repay the loan by the due date will not have to pay interest. This kind of scheme, perhaps, is being implemented for the first time in the country," the official added.

Outlining the contours of the scheme, officials said the loan will be made available for both the kharif and rabi crops seasons through gram sewa cooperative societies. There are over 5,000 such societies in Rajathan and all of them are linked to the loan scheme.

In the beginning of the year, the chief minister had allowed Rs.8,000 crore worth of cooperative loans. This has been hiked to Rs.9,431 crore so that more farmers benefit from the interest-free loan scheme.

In another decision, the chief minister has decided to release Rs.300 crore from the primary cooperative land development banks for disbursal as cooperative crop loans so that there is no shortfall of funds.

Officials said this was a part of the government's initiatives to help farmers in distress. Earlier, policy changes were made for award of compensation to farmers whose crops are destroyed by natural disasters.

"Now, farmers do not face any problem in getting compensations. The scope of the crop insurance scheme has also been widened and procedures have been simplified. The chief minister is keen that the problems of farmers are solved without delay," an official said.

Officials explained that when the Congress took power three-and-a-half years ago, a landmark decision was taken by Gehlot not to hike electricity tariff for crops for five years.

"Farmers who use electricity for irrigation are also being provided power for as many as eight hours every day. This is specially monitored and ensured. A special cell has been created at the chief minister's level to address complaints of farmers," an official said.

"The chief minister himself monitors the power situation and problems of farmers."