Finance Minister Nirmala Sitharaman unveiled key enhancements to the Kisan Credit Card (KCC) scheme during the Union Budget 2025, with proposed increases set to benefit millions of farmers. The new budget aims to bolster the agricultural sector, enhancing financial assistance and implementing new initiatives for rural growth.
Under the KCC scheme, the loan limit is set to rise from Rs 3 lakh to Rs 5 lakh, impacting approximately 7.7 crore farmers, fishermen, and dairy farmers across the nation. Sitharaman emphasized the importance of KCC as it offers short-term loans to those involved directly with agriculture and allied activities. Established back in 1998, the KCC program has been fundamental for farmers to secure timely credit needed for their production and operational expenses.
Sandeep Chilana, Managing Partner of Chilana & Chilana Law Offices, lauded the increase, stating, "Raising the loan limit for farmers under the KCC scheme is a positive step. It will give farmers access to formal credit, reducing their dependence on high-interest informal loans." He cautioned, though, about the challenges of ensuring prompt loan disbursal, especially for small and marginal farmers.
Rajarshi Dasgupta, Executive Director - Tax at AQUILAW, highlighted the expansion as necessary for helping farmers manage their working capital needs effectively. "With the increase in prices for agricultural procurement, such enhancements will significantly reduce farmers’ reliance on informal credit sources," he explained.
Beyond the KCC scheme, Sitharaman introduced the Dhan Dhanya Krishi Yojna, which aims to support 1.7 crore farmers across 100 districts identified as needing improvement. This initiative focuses on enhancing rural infrastructure, irrigation systems, and sustainable farming practices, creating opportunities rather than forcing migration to cities.
Moin Ladha, Partner at Khaitan & Co, remarked on how the new budget reforms include crop diversification measures—allowing farmers to improve productivity and yield significantly. Such initiatives are framed within the government's vision of achieving self-sufficiency (Aatmanirbharta) and boosting export potential.
The Economic Survey 2024-25 presented by the Minister indicates there are currently 7.75 crore operational KCC accounts, with total outstanding loans amounting to Rs 9.81 lakh crore. Specific figures show 1.24 lakh KCCs are issued for fisheries, and over 44 lakh for animal husbandry activities. This data endorses the growing importance of KCCs for various agricultural sectors.
Also among the highlights of the budget was the digitization of claim processing under the Modified Interest Subvention Scheme (MISS), which began operating through the Kisan Rin Portal (KRP) for more streamlined operations. By the end of December 2024, claims surpassing ₹1 lakh crore had been processed, directly benefiting around 5.9 crore farmers mapped through this digital system. For many, these reforms represent not just numbers, but opportunities for financial growth and access to resources.
An integral part of the budget discussions focused on the significant role the agricultural sector plays within the broader economy. Sitharaman underscored agriculture as "the first engine of growth," presenting the KCC enhancements as part of the government’s holistic approach to rural development. Alongside KCC alterations, she mentioned broader efforts, including promoting pulses self-reliance and establishing supportive infrastructure for varying sectors.
With the government mandatorily directing banks to allocate 40% of their Adjusted Net Bank Credit (ANBC) to priority sectors like agriculture, this move is expected to diminish the reliance on non-institutional credit sources, which stagnated at approximately 90% in 1950, down to about 25% by 2022.
On the ground, farmers hope these new initiatives translate to tangible benefits. The collaborative approach, including the involvement of state governments, aims at effective implementation. The smooth execution of enhanced KCC loan provisions, alongside new schemes like the Dhan Dhanya Krishi Yojna, signifies the commitment to improving rural livelihoods and fostering economic resilience.
For farmers reliant on credit, access to timely and sufficient funds can mean the difference between drought or bountiful harvests. The proposed measures have prompted optimism, underscored by analysts predicting positive impacts on both public and private sector lenders like the State Bank of India and HDFC Bank, which are anticipated to see profitable returns from increased lending activities.
While the scalability of these programs will be closely monitored, the Budget 2025 reforms are positioned as pivotal for shifting India's agricultural narrative, driving both operational success and intensified growth within the rural economy. These initiatives aspire not just to provide credit but to instill confidence within the farming community, ensuring they are well-equipped against climatic challenges and market fluctuations. Indeed, as the government lays out its vision for the future, the focus remains squarely on elevATING farmers and ensuring their financial stability.