Credit Guarantee Scheme: empowering farmers with Financial support and self-reliance

The Government of India has launched the Credit Guarantee Scheme for Pledge Financing (CGS-NPF) with a ₹1,000 crore corpus. Under this scheme, farmers can secure loans by pledging their produce stored in Warehousing Development and Regulatory Authority (WDRA) accredited warehouses through electronic negotiable warehouse receipts (e-NWRs). This initiative aims to prevent farmers from selling their produce at distress prices during financial crises.

The scheme aligns with the government’s broader vision of strengthening Indian agriculture, enhancing farmers’ productivity, and promoting self-reliance. Agriculture contributes 17.7% to the country’s Gross Value Added (GVA) in FY 2023-24 and provides employment to more than half of the population.

Empowering Small Farmers through the Credit Guarantee Scheme:

The CGS-NPF has gained significant traction among stakeholders, including the banking sector. By enabling credit against e-NWRs, the scheme aims to improve farmers’ incomes and provide them with greater access to institutional finance.

The scheme is particularly designed to benefit small and marginal farmers, women, Scheduled Castes, Scheduled Tribes, and persons with disabilities. It ensures higher guarantee coverage for smaller loans, fostering equitable financial access.

Kisan Credit Card (KCC):

Launched in 1998, the Kisan Credit Card (KCC) scheme offers farmers easy access to funds for agricultural production and related needs. In February 2019, the Reserve Bank of India extended KCC benefits to animal husbandry and fisheries for their working capital requirements.

Modified Interest Subvention Scheme (MISS):

The Modified Interest Subvention Scheme (MISS) provides concessional short-term agricultural loans for crop and allied activities. Loans of up to ₹3 lakh are offered at a 7% interest rate, with an additional 3% subvention for timely repayment, effectively reducing the interest rate to 4%. Post-harvest loans for small farmers are also available under this scheme.
Between 2014-15 and 2023-24, institutional credit flow to agriculture nearly tripled, rising from ₹8.5 lakh crore to ₹25.48 lakh crore. During this period, concessional crop loans disbursed under KCC doubled from ₹6.5 lakh crore to ₹15.07 lakh crore. The interest subsidy provided through KCC also increased 2.4 times, reaching ₹14,252 crore in FY 2023-24.

Strengthening Farmers and Building a Self-Reliant India: These schemes, including CGS-NPF, KCC, and MISS, collectively empower farmers, increase agricultural productivity, and lay the foundation for an Aatmanirbhar Bharat. By addressing critical gaps in agricultural financing and providing accessible credit, the government is creating a robust framework to support farmers and ensure sustainable growth in the sector.

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