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Financial Reforms in Agriculture Sector Ahead of Budget 2025, Major Changes Expected

Financial reforms in agriculture sector
Financial reforms in agriculture sector

Finance Minister Nirmala Sitharaman will present the Union Budget on Saturday, February 1 2025. The agriculture sector plays a crucial role in India's Gross Domestic Product (GDP), contributing to productivity and exports, which in turn can lead to significant income growth.

As part of efforts to enhance financial inclusion in the agriculture sector and strengthen social security for farmers, the Economic Survey 2024-25 was presented in Parliament. The Finance Minister highlighted that, as of March 2024, there are 77.5 million active Kisan Credit Cards (KCC) across the country, with an outstanding loan amount of ₹9.81 lakh crore.

Focus on Agriculture in the Upcoming Budget:

The previous budget placed significant emphasis on agriculture. The upcoming budget may focus on providing legal guarantees for Minimum Support Price (MSP) and prioritizing the farming sector. There is speculation that the Finance Minister may expand the coverage of the Pradhan Mantri Fasal Bima Yojana (PMFBY), increase financial support under the PM-Kisan scheme, and consider enhancements to the Kisan Maandhan Yojana. Additionally, the loan limit under the Kisan Credit Card scheme could be increased.

Significant Growth in Agricultural Credit:

Ground-Level Credit (GLC) has surged from ₹8.45 lakh crore in 2014-15 to ₹25.48 lakh crore in 2023-24. Notably, the share of small and marginal farmers has increased from 41% to 57%, indicating a growing inclination towards affordable institutional credit among farmers.

Digitization of Modified Interest Subvention Scheme (MISS):
The government has streamlined the processing of interest subvention claims through the Kisan Rin Portal (KRP), making it more efficient and transparent. By December 31, 2024, claims worth over ₹1 lakh crore had been settled, benefiting approximately 59 million farmers.

Improvements in the Pradhan Mantri Fasal Bima Yojana (PMFBY): Due to government efforts, enrollment in the PMFBY scheme has risen by 26%, reaching 40 million farmers. The insured agricultural area has expanded from 50 million hectares to 60 million hectares. Additionally, the number of participating states and insurance companies has increased from 20 states and 11 insurers in 2020-21 to 24 states and 15 insurers in 2024-25.

Impact of PM-Kisan and PM-Kisan Maandhan Yojana: The PM-Kisan scheme, which provides direct financial assistance to farmers, has benefited over 110 million farmers. Meanwhile, the PM-Kisan Maandhan Yojana (PM-KMY) has enrolled 2.36 million farmers under the pension scheme.

Mechanization in Agriculture and Drone Scheme for Women Farmers: The government has launched an initiative to provide 15,000 drones to Women Self-Help Groups (SHGs), allowing them to offer drone services on rent and generate additional income. Under this scheme, up to 80% of the drone cost (maximum ₹8 lakh) will be provided as a subsidy.

E-NAM Portal and Agricultural Market Reforms: The E-NAM portal has registered 17.8 million farmers and 262,000 traders. Additionally, 9,204 Farmer Producer Organizations (FPOs) have joined the initiative, with 4,490 organizations receiving a total grant of ₹237 crore.

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