The move follows price cuts in petrol Tuesday and in several other essential commodities like sugar ahead of the presidential poll on January 26.

The three agricultural credit schemes are the New Comprehensive Rural Credit Scheme (NCRCS), Agro Livestock Development Loan Scheme (ALDL) and Krushi Navodaya Special Loan Scheme.

The NCRCS loan scheme caters to 34 field crops including paddy and is provided to farmers for cultivation purposes, the bank said.

The scheme is also extended to buyers of these agricultural commodities, who have signed forward sale agreements with the farmers.

The interest rate on purchasing loans under forward sales agreement will be cut to 10 percent from 12 percent.

Under the Agro Livestock Development Loan Scheme the interest rate on loans for setting up milk processing factories and agro-based processing industries will be reduced to 12 percent from 14 percent.

The ALDL scheme, which was introduced under the government’s 2008 budget to increase liquid milk production in the country, disbursed 500 million rupees in 2009.

“A large number of dairy farmers have shown keen interest to register under this loan scheme,” the Central Bank said.

The Krushi Navodaya Loan Scheme caters to the medium term loan requirements of the farmer community for agriculture and animal husbandry.

The statement said the government’s aim in reducing interest rates on loans is to encourage new investment in agricultural and animal husbandry projects.

“This will enable an increase in the volume in agricultural produce and liquid milk and other livestock products,” it said.

“This in effect will serve the government’s objective of achieving country’s food security and uplifting the livelihood and the income levels of farmer community.”