Money plant: Clever farmers borrow at 4%, invest at 8.5%

When finance minister Pranab Mukherjee brought down the effective interest rate on crop loans to 4% in this year's budget, it was to encourage farmers to grow more food and address the supply side issue of food inflation. But canny farmers in some states have discovered an arbitrage opportunity in this — they avail of the loans from banks at 4% and then invest them in fixed deposits at 8.5%. 

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