The government may have lowered the interest rate on agriculture credit, but Prime Minister Atal Bihari Vajpayee on Sunday appeared apprehensive about middlemen preventing farmers from enjoying its benefits in full.

On July 16, the government nearly halved the interest rate to a maximum of nine per cent for crop loans up to Rs 50,000 as part of efforts to improve conditions for small farmers.

This move is expected to provide relief to farmers to the tune of Rs 2,500 crore (Rs 25 billion).

Now that the relief has been announced, Prime Minister Vajpayee said it must be ensured that the benefits reach the targeted populace.

Giving a call against giving bribes, he told farmers, "Karze ke liye dakshina nahin deni chahiye" (offerings should not be made for availing of loans).

"Banks are being asked to charge interest below their prime lending rates (PLRs) for agricultural loans up to Rs 200,000," he told farmers at a thanksgiving function organised at his residence.

Pointing out that interest on farm loans had so far been too high at 14-18 per cent, Vajpayee said even cars are available at much lower rates.

The prime minister said agriculture is a priority sector with his government and farm loans have been increased to Rs 82,000 crore (Rs 820 billion) in 2002-03 from Rs 32,000 crore (Rs 320 billion) in 1997-98.

Commenting on Agriculture Minister Rajnath Singh's description of the lowering of interest rate as an 'unprecedented' move, Vajpayee said, "In future, we will take many such unprecedented decisions."

In a bid to accelerate foodgrain exports, the prime minister called upon the farmers to become more competitive in the world market.

"Many countries in the world are experiencing food shortages, but they want to buy at low prices. I advise to you to reduce the cost of production to become more competitive", Vajpayee said.

Acknowledging the farmers' right to demand remunerative prices, he said the government would arrange remunerative prices in the international grain market provided input costs came down.

"The country's cost of producing grains is higher than international prices. At present, this difference is taken care of by the government," Vajpayee said.

Commending the farmers, Vajpayee said even though their expenditure has gone up, increase in production has been ensured.

Government on its part has increased support prices every year to keep up with increasing farm costs.

He said the focus should be on the twin issues of proper storage of foodgrains and their delivery to the targeted population.

"This is not because there is shortage in production, but because every grain has its price

and has to be used to fill the hungry man's stomach."

When godowns are overflowing and farmers are producing even more, none should starve to death, he said.

He said the government always gave priority to farmer while formulating policies. "They cultivate grains, so if there is a drought or floods, it is our duty to assist them," he added.

The function, organised by the Bharatiya Janata Party Kisan Morcha was attended amongst others by Agriculture Minister Rajnath Singh, Minister of State for Agriculture H N Yadav, Uttar Pradesh's Agriculture Minister Hukam Singh, Union Food Minister Sharad Yadav and Labour Minister S S Verma.