INTEREST
SUBVENTION SCHEME (ISS) - ECONOMY
News:
Interest subvention
scheme for farmers may get Rs 21,000-cr outlay in FY25
What's
in the news?
●
Sources said that under modified interest
subvention scheme (MISS) of the agriculture ministry, against a revised
budgetary allocation of Rs 18,500 crore for the current fiscal, around Rs
12,859 crore was disbursed till the beginning of January.
Key
takeaways:
●
The government is likely to make an outlay
of Rs 21,000 crore for reduce the cost of short-term loans for Kisan Credit
Cards (KCCs) holders in the forthcoming interim budget for 2024-25.
●
This amounts to an annual rise of 13%.
Modified
Interest Subvention Scheme (MISS):
●
Kisan Credit Card scheme was introduced by
the Government to empower farmers to
purchase agriculture products and services on credit at any time.
Backdrop:
●
To ensure that the farmers have to pay a minimal interest rate to the bank, the
Government of India introduced Interest Subvention Scheme (ISS), now renamed as
Modified Interest Subvention Scheme (MISS).
Aim:
●
To provide
short-term credit to farmers at subsidized interest rates.
Features:
●
Under the scheme, a short-term agriculture
loan up to Rs. 3.00 lakh is
available to farmers engaged in Agriculture and other allied activities
including Animal Husbandry, Dairying, Poultry and fisheries at the rate of 7% p.a.
●
An additional 3% subvention (Prompt Repayment Incentive – PRI) is also given to
the farmers for prompt and timely repayment of loans. Therefore, if a farmer
repays his loan on time, he gets credit at the rate of 4% p.a.
●
This support is 100% funded by the Centre.
Significance:
●
This scheme is the second-largest scheme
of the Department of Agriculture and Farmers Welfare (DA&FW) as per budget
outlay and coverage of beneficiaries.
●
Increase in Interest Subvention will
ensure the sustainability of credit flow in the agriculture sector as well as
ensure the financial health and viability of the lending institutions.
●
This will also lead to a generation of
employment since short-term agri-loans are provided for all activities
including Animal Husbandry, Dairying, Poultry, and Fisheries.