Budget 2025-26: KCC Loan Limit Likely to Increase to ₹5 Lakh, Big Relief for Farmers

Key Highlights

• KCC loan limit may increase from ₹3 lakh to ₹5 lakh.
• Supports farmers, livestock farmers, and fish farmers.
• Helps meet rising farming costs and improve the rural economy.
• NABARD encourages the inclusion of more fish and dairy farmers.
• Improvements expected in crop insurance for quicker payouts.

In the upcoming Union Budget 2025-26, the government is expected to announce a significant increase in the loan limit for the Kisan Credit Card (KCC) scheme. According to reports, the loan limit may rise from the current ₹3 lakh to ₹5 lakh. This decision aims to meet the growing financial needs of farmers and boost the rural economy.

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Rising Costs of Farming Prompt Action

A senior official revealed that farming costs have risen sharply in recent years, while the KCC loan limit has remained unchanged for a long time. Increasing the loan limit will provide much-needed financial support to farmers, allowing them to access funds at lower interest rates. If approved, this change will benefit millions of farmers and strengthen the agricultural sector.

Currently, farmers can take KCC loans of up to ₹3 lakh, with an interest rate as low as 4% for those who repay on time. By raising the limit to ₹5 lakh, farmers will have access to more funds to purchase better equipment, seeds, and technology, ultimately improving productivity and income.

Support for Small, Marginal, and Allied Farmers

The Kisan Credit Card scheme also benefits small and marginal farmers, as well as livestock and fish farmers. National Bank for Agriculture and Rural Development (NABARD) Chairman Shaji KV emphasized that agriculture is no longer limited to crop production. Allied activities, such as dairy and fisheries, play a crucial role in rural development.

NABARD is working with state governments to include more fish and dairy farmers under the KCC scheme. This expansion aims to make affordable credit accessible to all sections of the rural economy.

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Background of the Kisan Credit Card Scheme

Launched in 1998, the Kisan Credit Card scheme was designed to provide easy and affordable loans to farmers for agriculture and related activities. Farmers can currently access short-term loans at a base interest rate of 9%, with government subsidies reducing it to just 4% for timely repayments.

As of June 30, 2023, more than 7.4 crore active KCC accounts held an outstanding loan amount of ₹8.9 lakh crore, according to NABARD. This reflects the widespread adoption and critical role of KCC in the agricultural economy.

Improvement in Crop Insurance Scheme

In addition to increasing the KCC loan limit, the government is reportedly considering improvements to the Pradhan Mantri Fasal Bima Yojana (PMFBY). These changes aim to simplify and speed up the compensation process in case of crop loss, with reduced involvement of state governments to ensure timely relief for farmers.

A Step Toward Agricultural Growth

The expected increase in the KCC loan limit is seen as a major step to support farmers amid rising costs and economic challenges. This decision, coupled with other reforms like enhancing the crop insurance scheme, is likely to boost the confidence of the farming community and contribute to the development of India's rural economy.

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CMV360 Says

The Budget 2025-26 is assured to bring transformative changes for farmers by increasing the KCC loan limit and improving crop insurance. These measures aim to address rising farming costs, boost rural livelihoods, and strengthen the agricultural sector, providing much-needed financial support and empowering farmers to achieve sustainable growth and prosperity.