Union Minister of Finance Nirmala Sitharaman presented her record 8th consecutive Union Budget in Parliament on February 1, 2025. In her Budget Speech she also announced measures to support the marginal farmers of India with easy credit and loan availability.
Budget 2025: Govt Announces Increase In Loan Limit Under Kisan Credit Cards For Farmers
This would help farmers get better access to formal credit and reduces their reliance on high-interest informal borrowing. However, the key challenge will be ensuring smooth and quick loan disbursal, especially for small and marginal farmers, say experts
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She announced that Kisan Credit Cards (KCCs) will continue to facilitate short-term loans for 77 million farmers (particularly fishermen and dairy farmers).
“The loan limit under the modified interest subvention scheme will be increased from Rs 3,000 to Rs 5,000 for loans taken through the KCC. This would provide greater financial support for agricultural production,” Sitharaman said.
Experts Weigh In
According to experts, this is a positive move by the finance minister.
“Raising the loan limit for farmers under the KCC Scheme is a positive step that will give farmers better access to formal credit and reduce their reliance on high-interest informal borrowing,” says Sandeep Chilana, managing partner, Chilana and Chilana Law Offices.
However, he stresses that the key challenge will be ensuring smooth and quick loan disbursal, especially for small and marginal farmers.
“The government must also put safeguards in place to prevent over-borrowing and ensure that increased credit translates into real benefits for farmers rather than additional debt burdens,” Chilana says.
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Adds Rajarshi Dasgupta, executive director – tax, AQUILAW, “With the increase in prices on procurement in the hands of farmers, such enhancement will meet farmers’ short-term working capital needs and will reduce KCC reliance on informal credit sources.”
The finance minister has stressed on reforms across six domains for the development of India, namely: taxation, power sector, urban development, mining, financial sector, and other regulatory reforms.
She also announced the Dhan Dhanya Krishi Yojana that aims to enhance agricultural productivity, crop diversity, augment post-harvest storage, and facilitate long and short-term credit for farmers.
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