The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved continuation of the Modified Interest Subvention Scheme (MISS) for 2025-26. The government will allow 7.71 crore farmers to get short-term credit at subsidised rate of interest through Kisan Credit Card (KCC).
Information and Broadcasting Minister Ashwini Vaishnaw said this will help farmers get credit at lower interest rates as the interest subvention of 1.5 per cent will continue. The estimated cost of this extension will be ₹15,640 crore, he added.
MISS is a Central Sector Scheme, under which farmers get short-term loans of up to ₹3 lakh through KCC at a subsidised interest rate of 7 per cent, as the government covers 1.5 per cent interest subvention to eligible lending institutions.
Additionally, farmers repaying loans in time are eligible for an additional 3 per cent interest subsidy as Prompt Repayment Incentive (PRI), effectively reducing their interest rate on KCC loans to 4 per cent. Some States add another 2-3 per cent, making agriculture credit to farmers available at 1-2 per cent.
Account distribution
For loans taken exclusively for animal husbandry or fisheries, the interest benefit is applicable up to ₹2 lakh. Out of 7.71 crore KCC accounts, 47 lakh have been opened in the animal husbandry and dairy sector, while about 4.7 lakh are in fisheries sector.
The government said no changes have been proposed in the structure or other components of the scheme.
The continuation of the support is critical in sustaining the flow of institutional credit to agriculture, which is vital for enhancing productivity and ensuring financial inclusion of small and marginal farmers, the release stated.
Credit disbursement
Institutional credit disbursement through KCC increased ₹4.26 lakh crore in 2014 to ₹10.05 lakh crore by December 2024. Similarly, overall, agricultural credit disbursal has also increased from ₹7.3 lakh crore in 2013-14 to ₹25.49 lakh crore in 2023-24, the Minister said.
Given the current lending cost trends, median MCLR (Marginal Cost of Funds-based Lending Rate) and repo rate movements, retaining the interest subvention rate at 1.5 per cent remains essential to support rural and cooperative banks and ensure continued access to low-cost credit for farmers, added the release.
It further stated that the Cabinet’s decision reinforces the government’s unwavering commitment to doubling farmers’ income, strengthening the rural credit ecosystem, and boosting agricultural growth through timely and affordable credit access.