Has the Cabinet approved interest subsidy for farmers' loans in 2025-26?
Click to start listening
Synopsis
The Union Cabinet, under Prime Minister Modi's leadership, has approved the continuation of the interest subsidy for farmers' loans under the modified Interest Subvention Scheme for the fiscal year 2025-26. This initiative aims to enhance farmers' access to affordable credit, ensuring financial stability in the agricultural sector.
Key Takeaways
- Interest subsidy for farmers' loans extended for 2025-26.
- Farmers can access loans via Kisan Credit Cards.
- Interest rate reduced to 4 percent for timely repayments.
- Crucial for enhancing agricultural productivity.
- Over 7.75 crore KCC accounts active in India.
New Delhi, May 28 (NationPress) The Union Cabinet, led by Prime Minister Narendra Modi, on Wednesday sanctioned the extension of the interest subsidy component under the revised Interest Subvention Scheme (MISS) for financial assistance to farmers for the fiscal year 2025-26. The necessary fund arrangements were also approved, as per an official statement released post-meeting.
MISS is a Central sector initiative designed to facilitate short-term credit availability to farmers at competitive interest rates via Kisan Credit Cards (KCC).
Farmers are eligible for short-term loans of up to Rs 3 lakh through KCCs at a subsidized interest rate of 7 percent, with a 1.5 percent interest subvention granted to qualifying lending institutions.
Moreover, farmers who repay their loans on time can receive an additional 3 percent incentive for prompt repayments, effectively lowering their interest rate on KCC loans to 4 percent.
For loans specifically aimed at animal husbandry or fisheries, the interest benefit applies up to Rs 2 lakh.
No modifications have been suggested regarding the structure or other aspects of the scheme, according to the official statement.
Currently, there are over 7.75 crore KCC accounts across the nation. The ongoing support is crucial for maintaining the flow of institutional credit towards agriculture, which is essential for improving productivity and ensuring financial inclusion for small and marginal farmers.
The disbursement of institutional credit via KCC has surged from Rs 4.26 lakh crore in 2014 to Rs 10.05 lakh crore by December 2024. The overall agricultural credit flow has also increased from Rs 7.3 lakh crore in FY 2013-14 to Rs 25.49 lakh crore in FY 2023-24, as stated.
Digital advancements, such as the Kisan Rin Portal launched in August 2023, have improved transparency and efficiency in claims processing.
Given the current trends in lending costs, including median MCLR and repo rate fluctuations, maintaining the 1.5 percent interest subvention rate is vital to support rural and cooperative banks and ensure that farmers continue to have access to low-cost credit, the statement emphasized.
"The Cabinet's resolution strengthens the government's steadfast commitment to doubling farmers' income, fortifying the rural credit landscape, and enhancing agricultural development through timely and affordable access to credit," the statement concluded.
Point of View
I observe that this decision by the Union Cabinet reaffirms our commitment to enhancing the agricultural sector. The continuation of the interest subsidy is a testament to the government's efforts in ensuring financial accessibility for farmers, which is crucial for the nation's economic health and food security.
NationPress
10/09/2025
Frequently Asked Questions
What is the Interest Subvention Scheme?
The Interest Subvention Scheme (MISS) is a Central sector program aimed at offering farmers access to short-term loans at affordable interest rates through Kisan Credit Cards.
What are the benefits for farmers under this scheme?
Farmers can avail of loans up to Rs 3 lakh at a 7% interest rate, with a 1.5% subsidy for lending institutions and additional incentives for prompt repayments.
How does this decision impact small farmers?
This initiative ensures that small and marginal farmers have continued access to institutional credit, which is essential for their financial stability and productivity.
