The Union Cabinet, chaired by Prime Minister Narendra Modi has decided to continue with the Interest Subvention component, under the Modified Interest Subvention Scheme (MISS) for the financial year 2025-26. Although the Cabinet has approved for the required fund arrangements, no official disclosure of the exact budget allocated for the scheme is yet done. The primary objective of the scheme is to not only help the small and marginal farmers with critical credit, ensuring increase in productivity but also sustain momentum of institutional agricultural credit.
MISS is a Central Sector Scheme, first introduced in fiscal year 2006-2007 during the Kharif season by the then Finance Minister P. Chidambaram. Aimed at providing cheap agriculture credit to the farmers for short-term at concessional rates, the scheme decreases the dependency of farmers on informal and exploitative lending sources. Over the years, the scheme has been consistent in respect to interest rate for farmers at 7% for agricultural loans upto 3 lakhs rupees and Prompt Repayment Incentive (PRI) 3% for timely repayment, maintaining the effective rate to 4%. However, the subvention rate was reduced to 1.5% from the initial 2% in 2012 owing to the fiscal adjustments, and since then has sustained to facilitate affordable credits to farmers.
Key features of MISS
Farmers can avail the benefits of the central scheme through their Kisan Credit Card at a subsidized interest rate of 7% per annum. This concessional credit structure will be supported by the government in the following way-
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Lenders with prompt repayment will get an additional 3% Prompt Repayment Incentive (PRI), reducing effective rate to 4% on the principal amount.
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Eligible lending institutions will get 1.5% interest subvention.
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Loans solely for animal husbandry or fisheries will have interest subvention capped at rupees 2 lakh, to clinch support for allied agricultural activities.
The scheme also takes natural calamity into account. An additional 2% subvention during the first year of loan restructuring is provided to farmers affected from calamity, securing them financial relief during recovery. In cases of severe calamity, the support can be extended for up to three years, with a maximum duration of five years. Post-harvest assistance is also provided under the scheme with interest subvention for up to six months against the loans taken on the strength of Negotiable Warehouse Receipts (NWRs) registered with the Warehousing Development and Regulatory Authority (WDRA).
Claiming Process
Claims under MISS are submitted and processed by institutions lending loans to the farmers. The submission is done through Kisan Rin Portal, a centralized digital platform launched in August, 2023, to streamline claims management and disbursement. Then the claims are disbursed after verification. The Department of Agriculture and Farmers Welfare (DA&FW) under the Ministry of Agriculture & Farmers Welfare is empowered to verify the filed claims.
Eligible Lending Institutions:
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Regional Rural Banks (RRBs)
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Scheduled Commercial Banks (SCBs)
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Cooperative Banks
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Computerised Primary Agricultural Credit Societies (PACS)
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Small Finance Banks
Current Status
According to the government data (PIB), 7.75 crore KCC accounts exist across the country. The continuation of the central scheme for the current financial year is a reassertion of the government’s vision of doubling farmer’s income. It calls for an inclusive rural financial development. Maintaining 1.5% subvention by the Cabinet indicates the government’s consideration of the economic challenges.
Current MISS is an enhanced continuation of its legacy with targeted delivery of credit at its epicenter and much needed digital reforms for its efficient execution.
Way Forward
Though the Modified Interest Subvention Scheme (MISS) has its positive impacts, it faces critical challenges limiting its effectiveness. Exclusion of tenants and landless farmers, a big part of the actual beneficiaries, also seek support. Absence of any mechanism for their inclusion undermines the government’s commitment to agriculture and rural prosperity. Over reliance on Kisan Credit Cards (KCC) further restricts genuine recipients. Timely disbursement requires a centralized farmer database for equitable distribution of benefits. The government needs to address these issues going ahead to empower small and marginalized farmers to achieve economic inclusivity and sustainable agricultural economy .
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