According to a recent statement by the Ministry of Finance, the amount sanctioned under operative Kisan Credit Card (KCC) accounts has surpassed Rs 10 lakh crore, benefiting 7.72 crore farmers across India. This significant growth reflects the increasing availability of affordable working capital loans for farmers, with the total amount more than doubling from Rs 4.26 lakh crore in March 2014 to Rs 10.05 lakh crore in December 2024.
Introduced in 1998, the KCC scheme was designed to provide timely credit to farmers for purchasing essential agricultural inputs such as seeds, fertilizers, and pesticides, while also meeting the cash requirements for crop production and allied activities. In 2019, the scheme was expanded to include allied activities like animal husbandry, dairy, and fisheries, catering to the diverse financial needs of the farming community. This expansion has played a crucial role in offering comprehensive financial support to farmers.
Under the Modified Interest Subvention Scheme (MISS), the government provides a 1.5% interest subvention to banks on short-term agricultural loans of up to Rs 3 lakh, enabling a concessional interest rate of 7% per annum for farmers.
Additionally, a Prompt Repayment Incentive of 3% is offered to those who repay their loans on time, effectively reducing the interest rate to 4%. To support small and marginal farmers, loans up to Rs 2 lakh are provided on a collateral-free basis, ensuring hassle-free access to necessary funds.
In a bid to further empower the agricultural sector, the Union Budget 2025-26 announced an increase in the loan limit under MISS from Rs 3 lakh to Rs 5 lakh. This enhancement aims to provide farmers with greater financial flexibility, enabling them to make more substantial investments in agricultural and allied activities.
The budget also introduced a six-year program to boost the production of pulses and cotton, with the objective of reducing import dependence and enhancing domestic yields. The initiative includes procurement of pulses at guaranteed prices by state agencies and increased support for research and development in cotton cultivation.
The Economic Survey 2024-25 revealed that as of March 2024, there were 7.75 crore operative KCC accounts with an outstanding loan amount of Rs 9.81 lakh crore. It also highlighted that ground-level credit to agriculture has grown at a compound annual growth rate of 12.98% from 2014-15 to 2023-24, underscoring the expanding financial support for the farming community.
The continued rise in KCC credit indicates the deepening of institutional credit in agriculture, reducing farmers' dependency on informal sources of finance and strengthening the rural economy.
