Presenting the 14th consecutive Budget under the Narendra Modi government, Finance Minister Nirmala Sitharaman announced a significant boost for farmers by increasing the loan limit under the Kisan Credit Card (KCC) scheme. During her Budget presentation on February 1, 2025, she announced that the limit for the interest subvention scheme for KCC would be raised from Rs 3 lakh to Rs 5 lakh. This move is expected to provide farmers with greater access to institutional credit and strengthen the rural economy.
The government aims to further support agricultural financing by enhancing the loan limit under the Modified Interest Subvention (MIS) scheme. Sitharaman highlighted that the KCC scheme has already facilitated short-term loans for 7.7 crore farmers, including fishermen and dairy farmers. By increasing the loan limit, the government seeks to provide better financial support, ensuring timely credit availability and reducing financial stress on farmers.
Kisan Credit Card (KCC) Scheme
Introduced in 1998, the Kisan Credit Card (KCC) scheme was designed to provide farmers with easy access to credit for agricultural activities. Farmers can use the KCC to purchase essential inputs such as seeds, fertilizers, and pesticides, as well as withdraw cash for production needs. Over the years, the scheme has expanded to include investment credit for allied and non-farm activities.
In 2020, Prime Minister Narendra Modi launched a revised version of the KCC scheme, ensuring farmers receive adequate and timely credit support under a single-window system. The scheme offers an interest subvention of 2% and a Prompt Repayment Incentive of 3%, making credit available at a highly subsidized rate of 4% per annum.
Eligibility for the KCC Scheme
The KCC scheme covers a broad spectrum of farmers, including:
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Individual or joint borrowers who are owner cultivators
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Tenant farmers, oral lessees, and sharecroppers
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Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers, including tenant farmers and sharecroppers
The enhanced credit limit is expected to encourage more farmers to repay old dues, making them eligible for fresh loans under the revised scheme.
In addition to boosting agricultural credit, the Finance Minister announced a strategic move towards self-sufficiency in urea production. As part of this initiative, the government will reopen three government-run urea plants in the eastern region. This step aims to reduce dependency on imports and ensure a stable supply of fertilizers for farmers.
As of December 31, 2024, the Ministry of Agriculture & Farmers Welfare announced that Ground Level Agriculture Credit (GLC) disbursement for the financial year 2024-25 has reached Rs19.28 lakh crore, reflecting the government's continued efforts to strengthen agricultural financing.
