Prelims: Public policy| Government Initiatives | Current events of national and international importance.
Why in news?
Recently Indian Government approved the continuation of the Modified Interest Subvention Scheme (MISS) for 2025-26.
- Modified Interest Subvention Scheme (MISS) – It provoide short-term credit at an affordable rate to farmers through Kisan Credit Card (KCC).
- Launch - It is a Central Sector Scheme launched in 2006–07 by the Government of India.
- Funding – Fully funded by the central government.
- Implementation Mechanism – Implemented by RBI and NABARD.
- Operated through
- Public Sector Banks
- Regional Rural Banks (RRBs)
- Cooperative Banks
- Private Sector Banks in rural/semi-urban areas.
Key features
- Interest subvention – For Banks the interest subsidy is initially 2%, but later revised to 1.5%.
- For farmers short-term loans up to ₹3 lakh at a 7% annual interest.
- An additional 3% incentive for prompt repayment, lowering effective rate to 4%.
- As per Union Budget 2025–26, the loan limit is enhanced to ₹5 lakh.
- Loan Coverage Extended – It covers crop production loans and working capital for animal husbandry and fisheries.
- Interest benefit for these allied sectors is applicable up to ₹2 lakh.
- Disaster Relief Component – In case of natural calamities, restructured crop loans receive 2% interest subvention for the first year.
- It supports farmers during recovery and ensures continuity of agricultural activities.
Significance
- It ensures financial inclusion of rural farmers.
- It boosts productivity by supporting input needs.
- It protects farmers from high-interest informal loans.
- It also supports rural and cooperative banks in lending at subsidised rates.
- Scheme Continuation – The scheme will continue with the existing structure and 1.5% interest subvention rate for FY 2025–26.
Reference
The Hindu| Modified Interest Subvention Scheme (MISS)
