What Is FRP?
FRP stands for “Fixed Remunerable Principal”, and is a financial instrument used to repay loans or debt. This loan is an agreement between the lender and the borrower in which the principal amount and costs of the loan are planned to be repaid after a specified period of time.
The main feature of FRP is that no interest has to be paid on the principal amount after the stipulated period to repay the loan, only the costs have to be paid. This means that the borrower repays the principal amount of the loan periodically, as well as incurs the interest costs of the loan.
It is part of a financial contract and generally promotes trust and stability between lenders and borrowers on some literate scale.
Benefits to farmers from FRP?
FRP can benefit farmers in various ways:
FRP gives farmers stability regarding the principal amount of the loan, as they have to repay the principal amount of their loan periodically, and this can be a form of financial security for them.
Under FRP, farmers do not have to pay interest on the principal amount of the loan, only the costs. With this, farmers can save interest and their debt is less worried about increasing.
FRP forms part of the financial contract and promotes secure and stable financial agreements between borrowers and lenders, which can provide financial support to farmers.
Timely repayment of loan:
Under FRP, a timely repayment of the principal amount of the loan is planned, resulting in early repayment of the loan.
For farmers, FRP can act as a stable financial option that can help them towards economic security and prosperity.
What is sugarcane FRP per quintal?
The basic amount of FRP (Fixed Remunerable Principal) of sugarcane is determined per quintal of sugarcane. This amount is determined for the sugarcane growers in India so that they can get a fair price on their scale. The FRP amount is paid annually and is deposited directly into the bank accounts of designated farmers.
The amount of FRP is determined based on manufacturing, market prices of sugarcane, region, and many other factors, and may change from year to year. Its objective is to ensure that farmers get fair prices so that they can do good farming and improve their economic condition.
The basic amount of FRP per quintal of sugarcane varies from specific state and region, hence it is very important for determined farmers and sugarcane growers.
outstanding value of sugarcane farmers
The central government is making timely payments to the farmers of the country. For this, the government says that the improvement in the condition of the industry due to sugar export and ethanol manufacturing has been considered important. Two years before this, Rs 76,000 crore had to be paid to the sugarcane farmers in 2019-20, out of which the government has already paid Rs 75,700 crore to the farmers. This means that payment of approximately Rs 142 crore is still outstanding to the farmers.
In the same year 2020-21, Rs 91,000 crore was to be paid by the government to the sugarcane farmers, out of which sugarcane worth Rs 90,872 crore was purchased and Rs 86,000 crore has been paid to the farmers. This shows that due to other schemes issued by the Central Government, whereas earlier sugarcane farmers had to wait for years for payment, now it is happening immediately. The Prime Minister of the country, Shri Narendra Modi is always concerned that the sugarcane farmers should be provided their payments on time.
Importance of FRP
The Fixed-Rate Principle (FRP) is important for several reasons, especially in the context of financial stability and fairness. Here are some key reasons why FRP is important:
FRP provides financial stability for borrowers by fixing the principal amount to be repaid over a specified period. This stability helps borrowers plan their finances and ensures that they will not have to repay a fluctuating principal amount.
FRP ensures that borrowers know exactly how much they need to repay, eliminating uncertainty and surprise in loan repayment. This predictability is essential for financial planning.
By fixing the principal amount, FRP makes it easier for borrowers to manage their debt. They can focus on repaying the principal without worrying about fluctuating interest costs.
Reducing Interest Burden:
FRP often reduces the overall interest burden on borrowers because they do not need to pay interest on the original principal amount. This can save borrowers money in the long run.
FRP can make borrowing more attractive to individuals and businesses as it offers more stable and predictable terms. This can promote investment and economic growth.
FRP promotes a stable and predictable relationship between lenders and borrowers, leading to trust and better financial cooperation.
FRP may be mandated by regulatory authorities or government policies to protect borrowers from predatory lending practices and ensure fair and transparent lending terms.
In the context of macroeconomics, FRP can contribute to economic stability by reducing the likelihood of financial crises caused by unsustainable debt levels and unpredictable interest payments.
FRP can be seen as a form of consumer protection, ensuring that borrowers are not subject to exploitative lending practices or hidden fees.
FRP can be considered fair as it ensures that borrowers repay only the principal amount borrowed, which can prevent them from falling into a debt trap due to compounding interest.
In summary, the importance of FRP lies in its ability to provide financial stability, predictability, and fairness to borrowers. It can be an effective tool for managing debt and promoting responsible lending and borrowing practices.