Kisan Credit Cards : In the revised estimates for the ongoing fiscal year, the agriculture ministry is gearing up to allocate Rs 18,500 crore for the Modified Interest Subvention Scheme (MISS). Foreseeing a surge in credit uptake, the government has proposed a substantial 22% increase in the allocation for the 2024-25 fiscal year, reaching a total of Rs 22,600 crore under the Interest Subvention Scheme, aimed at providing short-term loans to Kisan Credit Cards (KCC) holders.
The revised estimate for the current fiscal places the actual allocation from the agriculture ministry for MISS at Rs 18,500 crore. This decision to increase the allocation for the next fiscal is spurred by the expected elevation in the overall agri-credit target, projected to rise from Rs 20 trillion in the current fiscal to Rs 22 trillion in FY25.
While the initial budget estimate for the current fiscal stood at Rs 23,000 crore, the actual expenditure in FY23 under the scheme amounted to Rs 17,997 crore, slightly below the revised estimate of Rs 19,700 crore.
Officials clarified that the lower initial allocation for interest subvention was a result of a mandatory budget allocation of 10% earmarked for the northeastern states, where the flow of farm credit has been relatively low.
A noteworthy observation points to a significant regional imbalance in agricultural credit distribution, with the eight northeastern states receiving a mere 0.62% of the country’s total disbursement, despite accounting for 3.2% of the country’s cropped area.
Under MISS, farmers holding Kisan Credit Cards can avail themselves of loans up to Rs 3,00,000 at a benchmark rate of 9% per annum to meet their working capital needs for crop production. The government extends a 2% interest subvention on the benchmark rate, with an additional 3% subvention provided to farmers for prompt repayment, effectively reducing the interest rate to 4% per annum.
For short-term loans taken for allied activities in sectors like animal husbandry and dairying, the interest subvention is Rs 2,00,000 per Kisan Credit Cards holder. Out of the 73.6 million Kisan Credit Cards holders, 23.7 million are engaged in agri-allied sectors.
Officials underscored that short-term crop loans are utilized for pre-harvest activities such as weeding, sorting, harvesting, and transportation, as well as for the purchase of agricultural inputs such as seeds, fertilizers, or pesticides.
Within the framework of MISS, financial institutions, including public sector banks, regional rural banks (RRBs), or cooperative banks, are entitled to a 1.5% interest subvention during FY23 to FY25, with RRBs and cooperative banks also benefiting from refinancing facilities.
To safeguard KCC holders against distress sales, interest subvention benefits are extended for post-harvest loans against negotiable warehouse receipts for six months. Additionally, farmers affected by severe natural calamities receive interest subvention and prompt repayment incentives on restructured crop loans for five years.”
