Prime Minister Manmohan Singh [Images] on Saturday announced a Rs 3,750 crore package including a write off of Rs 712 crore overdue interest for drought hit Vidarbha that witnessed a spate of suicides by debt-ridden farmers.

The package also includes rescheduling of Rs 1,296 crore agricultural credit over a period of 3-5 years with one year moratorium in the six drought affected areas of Vidarbha, the prime minister said after a two-day visit to the region that has witnessed 600 suicides in a year and 1,600 in the last six years.

He said this package would be extended to other drought affected states of Andhra Pradesh, Kerala [Images] and Karnataka.

The government would also set up an expert group in the next few days to look into the problem of rural indebtedness in its totality, Dr Singh said.

The group is expected to submit its report within three months, he said adding, that based on the recommendations, the government will take effective measures to deal with the problems of farming community.

The six districts are Amaravati, Akola, Washim, Buldhana, Yavatmal and Wardha.

The package will also include an additional flow of Rs 1,275 crore agriculture credit for 2006-07 for the six affected areas and special teams would be deputed from NABARD for the purpose.

A sum of Rs 78 crore would be extended for micro-irrigation projects, Dr Singh said adding, Rs 3 crore would be provided for strengthening the existing agri-extension network in the drought affected areas.

"We are also allocating Rs 2,177 crore from the Centre for completion of major, medium and minor irrigation projects in the six districts over the next three years," Dr Singh said.

He said waiver of the interest overdue till June 30, 2006, would provide immediate relief to the farmers who can once again avail fresh loans.

Replying to questions, he said there are problems of low productivity, of unremunerative prices.

"We will look at it if there is a need to change the policy... we will modify them," he said.

The package would also be supplemented by Rs 225 crore for the National Horticultural Mission and Rs 135 crore subsidiary income through livestock, cattle and fodder.

The prime minister also announced a Rs 180 crore programme for providing new cotton seeds to the farmers.

He also decided to provide a package of Rs 240 crore for water harvesting and construction of check dams in these districts.

In reply to a question, Dr Singh assured that he would look into the issue of higher MSP for bajra to reduce excessive dependence on cotton.

Dr Singh said he would take up the issue with the Commission on Agriculture Costs and Prices.

A sum of Rs 240 crore would be provided for water harvesting, watershed development and construction of check dams in the affected districts.

He said a sum of Rs 180 crore would be provided for sowing of new cotton seeds in these districts.

Dr Singh said a grant of Rs 50 lakh would be extended immediately from the Prime Minister's National Relief Fund to each of the six districts of Vidarbha.

The prime minister said a cell would be set up to monitor implementation of the package and the government would take an overall view of such problems in the country.

Observing that the rural indebtedness was a countrywide problem, he said the proposed group would go into the matter and come with concrete solutions.

On environmental clearances, he said he would discuss the issues with the minister concerned to avoid time and cost overruns.