Indian Government Approves Continued Interest Support on Farm Loans for 2025-26
02 June 2025, New Delhi: The Government of India has approved the continuation of its Modified Interest Subvention Scheme (MISS) for the financial year 2025–26, ensuring the ongoing availability of low-interest loans to millions of farmers across the country. The decision was taken by the Union Cabinet chaired by Prime Minister Narendra Modi and reflects the government’s focus on maintaining agricultural productivity and financial inclusion in the rural economy.
Continued Access to Affordable Credit for Indian Farmers
Under this scheme, Indian farmers can avail short-term crop loans of up to ₹3 lakh (approximately USD 3,600) at a subsidised interest rate of 7%. The government provides an interest subvention of 1.5% to lending institutions such as banks, helping reduce the lending cost. Farmers who repay their loans promptly receive an additional 3% incentive, bringing down their effective interest rate to 4%.
For loans taken specifically for animal husbandry or fisheries, the scheme applies to amounts up to ₹2 lakh (approximately USD 2,400). No changes have been made to the structure or operational framework of the scheme, ensuring continuity and ease of implementation.
Over 77 Million Indian Farmers Supported
As of now, India has over 7.75 crore (77.5 million) active Kisan Credit Card (KCC) accounts, which form the backbone of short-term rural credit. These cards enable farmers to access working capital in a timely manner for essential farming inputs such as seeds, fertilisers, irrigation, and livestock maintenance.
Over the past decade, institutional credit through KCCs in India has expanded rapidly. From ₹4.26 lakh crore in 2014, the amount disbursed through KCCs rose to ₹10.05 lakh crore by December 2024. The overall agricultural credit flow in India also surged from ₹7.3 lakh crore in FY 2013–14 to ₹25.49 lakh crore in FY 2023–24, reflecting strong government support for farm finance.
Technology Driving Transparency and Efficiency
The Government of India launched the Kisan Rin Portal in August 2023 to streamline the process of claim settlements and improve transparency. This digital system enables efficient tracking of loan disbursements and subsidy transfers, helping financial institutions better manage interest subvention claims.
Policy Continuity Amidst Interest Rate Challenges
Given the prevailing repo rate and lending cost trends, retaining the 1.5% interest subvention is seen as vital for supporting rural and cooperative banks. It allows them to continue offering credit at affordable rates while absorbing cost pressures.
Significance for India’s Rural Economy and Agri-Business Sector
This policy extension highlights India’s ongoing efforts to strengthen rural credit systems, support agricultural livelihoods, and stimulate economic activity in the farm sector. For agri-input companies, financial institutions, and international stakeholders involved in India’s agri-business landscape, the decision reinforces a stable environment for business planning and growth.
By ensuring that Indian farmers continue to receive timely, low-cost credit, the government aims to boost agricultural productivity, enhance rural incomes, and accelerate progress toward its long-term development goals in the farm economy.
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