Modified Interest subvention scheme (MISS) has been launched by the central government for the welfare of farmers. Now the Union govt. of India is looking to raise limit of crop loans from existing Rs. 3 lakh to Rs. 5 lakh. A proposal for this move, which will allow farmers to borrow more at a concessional rate, is under consideration in the Ministry of Agriculture and Farmers' Welfare. Read this article till the end to know Modified Interest Subvention Scheme complete details.
Crop Loan Limit to Raise in Modified Interest Subvention Scheme
Crop loan limit (upper limit) of Rs. 3 lakh has remained unchanged since 2006-07, when the Interest Subvention Scheme, the original variant of MISS, was launched by then Finance Minister P Chidambaram. Now the central govt. is planning to increase the upper limit of short term crop loans under the Modified Interest Subvention Scheme from Rs. 3 lakh to Rs. 5 lakh.Several state governments of India have been demanding a raise in the ceiling, under which farmers can avail Kisan Credit Card (KCC) loans at a concessional annual rate of interest of 7%, and 4% in case of prompt and timely repayment. On 10 July 2024, Uttar Pradesh Agriculture Minister met Union Agriculture Minister Shivraj Singh Chouhan and asked for the upper limit to be increased to Rs. 5 lakh.
KCC Loan Interest Rate in Modified Interest Subvention Scheme
- 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% interest per year..
- However, the central govt. provides 2% per annum interest subvention on the benchmark rate.
- This brings down the effective rate of interest to 7% per year.
- An additional 3% concession on interest is provided to farmers for prompt and timely repayment.
- Accordingly, if a farmer makes prompt and timely repayment, then effect rate of interest gets reduced to 4% p.a.
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. MISS aims to protect the farmers against distress sale of their produce.
Allocation of Funds for Interest Subvention under MISS
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 1 February 2024 this year.About Interest Subvention Scheme (ISS) of Central Govt
The Interest Subvention Scheme (ISS) provides concessional short term agri-loans to the farmers practicing crop husbandry and other allied activities like animal husbandry, dairying and fisheries. ISS is available to farmers availing short term crop loans up to Rs. 3.00 lakh at an interest rate of 7% per annum for one year. Additional 3% subvention is also given to the farmers for prompt and timely repayment of loans thus reducing the effective rate of interest to 4% per annum.
Interest Subvention Scheme's benefit is also available for post-harvest loans against Negotiable Warehouse Receipts (NWRs) on crop loans for a further period of six months post-harvest to small and marginal farmers having Kisan Credit Cards (KCCs), on occurrence of natural calamities and severe natural calamities. As on 05-01-2024, 465.42 lakh new KCC applications have been sanctioned with a sanctioned credit limit of Rs. 5,69,974 crore as part of the drive.
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