Agriculture and Allied Activities sector in India
The ‘Agriculture and Allied Activities’ sector has long
been the backbone of the Indian economy, playing a vital role in national income
and employment. With nearly 46.1 per cent of the population
engaged in agriculture and allied activities, ensuring financial security and
accessible credit for farmers remains a top priority for the government.
Recognizing this, the Union Budget 2025-26 introduces key measures to strengthen
agricultural financing, particularly through the Kisan Credit Card
(KCC) scheme.
The KCC scheme has been instrumental in fulfilling farmer’s financial
needs. With a significant increase in the loan limit under the Modified
Interest Subvention Scheme from ?3 lakh to ?5 lakh; this year’s
budget underscores the government's commitment to empowering farmers and
boosting agricultural productivity.
This article presents a comprehensive understanding of the KCC scheme and
how it transforms agricultural credit accessibility in India.
What is Kisan Credit Card Scheme
Safeguarding and ensuring hassle-free credit availability at a cheaper rate
to farmers has been the top priority of the government. Accordingly, the Kisan
Credit Card Scheme (KCC) was introduced for farmers to provide farmers
with easy access to affordable credit for their agricultural needs so as to
meet short term /long term cultivation requirements, postharvest expenses,
consumption requirement etc.
How does KCC help Farmers?
The Kisan Credit Card (KCC) scheme is designed to provide
farmers with adequate and timely credit to meet their diverse financial needs.
It helps farmers access institutional credit easily, ensuring their financial
stability and agricultural productivity. The scheme offers support for:
·
Cultivation and post-harvest activities: Ensuring
funds are available for cultivation and post-harvest costs.
·
Marketing loans: Helping farmers bridge financial gaps until
they sell their produce at competitive market rates.
·
Household consumption needs: Offering
financial support to meet essential household expenses, preventing dependency
on informal lending sources.
·
Working capital for farm assets: Assisting
in the maintenance of essential farming equipment and infrastructure.
·
Investment credit for allied activities: Expanding
financial access to animal husbandry, dairying, fisheries, and other
agricultural extensions.
Recognizing the importance of allied sectors, the KCC scheme was expanded
in 2019 to include animal husbandry, dairying, and fisheries. Banks can provide
collateral-free loans up to ?1.60 lakh, ensuring financial security and
fostering growth in these allied fields.
Understanding Short Term Loans
The Modified Interest Subvention Scheme (MISS) offers
concessional Short-term Agri-loans to farmers for crop and
allied activities, providing a 7% interest rate on loans up
to ?3.00 lakh, with an additional 3% subvention for
timely repayment, reducing the effective rate to 4%. MISS also
includes post-harvest loans against NWRs for small farmers with KCCs.
Ensuring Transparency
The Kisan Rin Portal (KRP) launched in September 2023
addresses key challenges in the MISS-KCC scheme. Previously, banks had to
submit claims for Interest Subvention (IS) and Prompt Repayment Incentive (PRI)
manually to the Reserve Bank of India (RBI) and NABARD, leading to significant
delays and inefficiencies. The Kisan Rin Portal digitizes this process,
ensuring farmers and lending institutions benefit from quicker, seamless
transactions, improving access to credit for agricultural needs.
·
Empowering Farmers with Seamless Access to Credit
·
Benefiting Financial Institutions: Banks and
Cooperatives
·
Reaching the Grassroots: Training and Support
By 31 December 2024, it had processed claims worth ?108336.78
crore including Interest Subvention (IS) and PRI. About 5.9
crore farmers that are currently getting benefitted under the MISS-KCC
scheme, have been mapped through KRP.
Achievements of Agriculture sector
·
As of March 2024, the country has 7.75
crore operational KCC accounts with a loan outstanding of ?9.81
lakh crore.
·
1.24 lakh KCC and 44.40 lakh KCC were
issued to fisheries and animal husbandry activities, respectively.
·
In the last 10 years, Rs 1.44 lakh Crore of
Interest Subsidy has been released on Kisan Credit Card loans. It has risen
nearly 2.4 times, from ?6,000 Crore in 2014-15
to ?14,252 crore in 2023-24.
·
Institutional credit flow to agriculture has risen
nearly three times since 2014-15, rising from ? 8.5 lakh Crore to ?
25.48 lakh Crore in 2023-24. Short-term agriculture credit has more
than doubled, increasing from ? 6.4 lakh Crore in 2014-15 to ? 15.07
lakh Crore in 2023-24.
·
The proportion of Small and Marginal Farmers
accessing agriculture loans grew from 57% in 2014-15 to 76% in 2023-24.
Conclusion
The Kisan Credit Card scheme has been instrumental in transforming
agricultural credit accessibility, ensuring that farmers receive timely and
affordable financial assistance. By increasing financial support under
the Union Budget 2025-26, the government is reinforcing its
commitment to empowering farmers. These initiatives not only promote
agricultural growth but also enhance rural livelihoods, paving the way for a
resilient and self-sufficient farming community in India.
References
Annual Report 2023-24 https://www.agriwelfare.gov.in/en/Annual
Economic Survey of India: https://www.indiabudget.gov.in/economicsurvey/index.php
https://static.pib.gov.in/WriteReadData/specificdocs/documents/2024/dec/doc20241219474501.pdf
(A PIB Feature)
