Interest subvention scheme: Govt looks to raise limit of crop loans from Rs 3 lakh to Rs 5 lakh

Under MISS, farmers engaged in Agriculture and other allied activities can acquire Kisan Credit Card loans up to Rs 3 lakh at a benchmark rate of 9%. However, the Centre provides 2% interest subvention on the benchmark rate, bringing down the effective rate of interest to 7 per cent. An additional 3% concession for prompt and timely repayment further reduces it to 4% per year.

According to the Agriculture Ministry, the benefit of the interest subvention scheme is also available for post-harvest loans (for six months post-harvest) to small and marginal farmers having Kisan Credit Cards, with the aim of protecting them against distress sale of their produce.

The Rs 3-lakh upper limit has remained unchanged since 2006-07, when the Interest Subvention Scheme, the original variant of MISS, was launched by then Finance Minister P Chidambaram.

In the financial year 2023-24, the Centre had set the agriculture credit target at Rs 20 lakh crore, with a focus on animal husbandry, dairy and fisheries. It had also allocated Rs 23,000 crore for interest subvention under MISS, although at the revised estimate stage the figure was reduced to Rs 18,500 crore.

For the 2024-25 fiscal, Finance Minister Nirmala Sitharaman had allocated Rs 22,600 crore under MISS in the interim Budget presented to Parliament on February 1 this year.