The central government is set to announce an agriculture package including lowering the rate of interest for agriculture credit to 9 per cent, enhancing import duty on edible oil and commissioning a farmers' channel on Doordarshan.

Finance Minister Jaswant Singh and Agriculture Minister Rajnath Singh are expected to announce the agricultural prime lending rate on July 16.

After a series of high-level meetings to discuss farmers' issue, the finance ministry has approved the proposal to cut the rate of interest for agricultural credit and strengthen the National Bank for Agricultural and Rural Development.

At present, the prime lending rates for banks are hovering around the 11-11.5 per cent level with the bank rate at its lowest ebb in nearly three decades. The government is, however, of the opinion that the benefits of a softer interest rate regime have not percolated to the farming community.

Similarly, the enhancement of import tariff for edible oil is aimed at pacifying farmers of southern states where the issue has been snowballing into a political controversy. "A decision has been taken to enhance import tariff for edible oil," official sources said.

But what appears to be a political "coup" of sorts is the acceptance of the proposal for a television channel exclusively for farmers which will be allocated fixed time on DD-I to disseminate information about the government's schemes for farmers' welfare. The channel would target farmers to make political appeals, albeit in a subtle manner, sources said.

The government was also planning to set up an insurance company for crop insurance as one of the measures to help farmers, officials added.

However, the Centre's move to help out sugarcane growers of Uttar Pradesh may come a cropper because UP chief minister Mayawati is learnt to have rejected the central government's offer to pay off farmers' dues.

After a marathon meeting of officials of the food ministry and the agriculture ministry, a formula was devised to help farmers of Uttar Pradesh, Uttaranchal and Haryana by extending loans to these states for payment of dues.

The logic was that because only these three states follow a system of the state advisory price, the Centre should give a loan of Rs 600 crore (Rs 6 billion) to these states.

A substantial part of the loan [about Rs 450 crore (Rs 4.50 billion)] would have gone to Uttar Pradesh where mounting farmers' dues represent a major political embarrassment for the Bharatiya Janata Party, a coalition partner with Mayawati's BSP.

However, the BJP's hopes of winning over farmers through the Centre's intervention were dashed by the state government which rejected the suggestion that it should take a loan.

In fact, the difference between the statutory minimum price and the state advisory price set by the state governments have prompted sugar mills in Uttar Pradesh to stop payment to farmers causing a widespread resentment.

With Rajnath Singh taking over the agriculture ministry, the BJP made a determined attempt to win over the farmers' constituency.

Singh had a detailed discussion with the prime minister on the issue last week. Official sources said though the prime minister had agreed to provide relief to farmers, there was uncertainty on a formula that could be applied to the whole nation. The move to help farmers in Uttar Pradesh is expected to generate similar demands from other states.