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Informist, Tuesday, July 16, 2024

 

By Pallavi Singhal and Kuldeep Singh

 

NEW DELHI – The Centre is likely to increase the credit limit under the Kisan credit card scheme to 500,000 rupees from the existing 300,000 rupees, two senior government officials told Informist. 

 

A proposal in this regard has already been sent to the finance ministry for approval, one of the officials said on condition of anonymity. "The rationale behind the decision was to increase availability of credit to the farmers who are facing issues due to rising input costs," the official said. If the limit is increased, farmers will have enough money to sow crops for an entire year, the official said. 

 

"Right now, farmers can only get additional credit after they pay back the loan taken. This will reduce their dependence on informal credit lenders," one of the officials said. 

 

The Kisan credit card scheme was introduced in 1998 to provide farmers with formal, timely, and short-term loans for agricultural inputs. Under this, a farmer can currently avail a loan of up to 100,000 rupees against a landholding of 1 acre, with an upper limit of 300,000 rupees. The interest on loans up to 300,000 rupees is 7%, and subsidies are provided on interest rates for those who return the principal amount within a year.

 

State Bank of India, the country's largest lender, had an agricultural loan portfolio of 3.02 trln rupees in 2023-24 (Apr-Mar), up almost 18% from 2.56 trln rupees in the previous fiscal year. The total outstanding amount under the Kisan credit card scheme saw a 10.9% rise at 5.74 trln rupees in 2023-24, up from 5.18 trln rupees in 2022-23, according to data from the Reserve Bank of India's 2023-24 annual report.

 

In the interim Budget for 2024-25 (Apr-Mar) tabled on Feb 1 this year, the government allocated a 22% higher amount to the Kisan credit card scheme. The allotment stood at 226 bln rupees, against the revised estimate of 185 bln rupees for 2023-24.

 

The government is also considering incentivising crop diversification, one of the officials said. In recent years, the government has been promoting the cultivation of crops other than cereals, such as pulses, oilseeds and nutri-cereals, by offering higher minimum support prices for these crops. Over the previous year, the highest absolute increase in minimum support prices has been recommended for oilseeds and pulses.  End

 

Edited by Avishek Dutta

 

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