Tamil Nadu Chief Minister J. Jayalalitha has opposed the RBI’s move for the revision of interest rate for the Rural Infrastructure Development Fund (RIDF) from 6.5% to 8%.

The decision applies from this April for all loans, including all past loans, provided under the RIDF. The RIDF scheme is from the NABARD (National Bank for Agriculture and Rural Development). Addressing a letter to the Prime Minister, whose text was given to the press today, Jayalalitha said: “Such a high rate will make RIDF loans unviable and the states will be forced to cut down on investment in rural infrastructure which is vital for inclusive development.”

The Chief Minister noted that Tamil Nadu has a bank sanction of Rs.2, 184 crore under the RIDF for which funds will be drawn in 2012-13 and subsequent years.

Stating that the state had proposed such massive investment using RIDF loan on the assumption that the interest rate would remain reasonable, she said the recent increase in interest rate would add an additional burden of RS.229 crore on the projects already sanctioned and under implementation.

Seeking Prime Minister’s personal intervention, Jayalalitha demanded that the interest on RIDF loan should be restored to its original rate of 6.5 per cent.

If at all the interest rate has to be enhanced, she said, it should be kept around 7 percent.(msn)