The government’s agricultural credit mechanisms have been strategically designed to promote climate-resilient farming, ensure farmers’ financial security, and drive sustainable agricultural development.
Agriculture is the backbone of India’s economy, and under the leadership of Prime Minister Narendra Modi, the government has undertaken groundbreaking reforms to enhance financial access, improve resilience, and modernize agricultural practices. The government’s agricultural credit mechanisms have been strategically designed to promote climate-resilient farming, ensure farmers’ financial security, and drive sustainable agricultural development. The details of these mechanisms are outlined below:
Interest Subvention for Farmers Affected by Natural Calamities
The Kisan Credit Card (KCC) – Modified Interest Subvention Scheme (MISS) is a key initiative that ensures affordable short-term credit to farmers. Under this scheme, farmers can avail of loans at a subsidized interest rate of 7%, with an additional 1.5% upfront interest subvention provided to financial institutions. Farmers who make timely repayments benefit from a 3% Prompt Repayment Incentive (PRI), reducing the effective interest rate to 4% per annum. In cases of natural calamities, restructured crop loans are eligible for extended interest subvention and PRI benefits, providing much-needed relief and financial stability to affected farmers.
Agriculture Infrastructure Fund (AIF): Driving Climate-Resilient Farming
AIF has been instrumental in providing medium to long-term credit for decentralized infrastructure such as farm gate storage and logistics, reducing post-harvest losses. Loans under AIF come with an interest subvention of 3% for amounts up to ₹2 crore, ensuring affordability. The scheme supports climate-smart investments, including decentralized solar power plants under PM-KUSUM, organic input production, and precision agriculture tools. These efforts are making Indian agriculture more resilient to climate change and ensuring long-term sustainability.
Promoting Climate-Resilient Agriculture
The government’s emphasis on climate-resilient agricultural practices is evident in its support for programs such as the National Innovations on Climate Resilient Agriculture (NICRA), which integrates climate adaptation strategies into watershed development projects. Moreover, Agri Fintech platforms like ITC MAARS facilitate easier access to KCC loans, enabling farmers to adopt climate-smart technologies efficiently.
Customized Climate Financial Products
To further incentivize climate adaptation, financial products tailored for climate-vulnerable regions have been introduced. Institutions like NABARD play a pivotal role in channeling resources from the Green Climate Fund (GCF) and the National Adaptation Fund for Climate Change (NAFCC), ensuring farmers have access to funds necessary for climate-resilient infrastructure and technology adoption.
Renewable Energy in Agriculture: The PM-KUSUM Scheme
Recognizing the importance of sustainable energy, the PM-KUSUM scheme provides financial support for farmers to install solar-powered irrigation systems, reducing dependency on fossil fuels. Subsidies of up to 50% are offered for standalone solar pumps, grid-connected solar power plants, and solarizing existing pumps, thus ensuring energy security for rural farmers and minimizing carbon emissions.
NABARD’s Watershed Development and Livelihood Initiatives
NABARD’s Watershed Development Programme has been transformative for rainfed regions, improving water availability, enhancing productivity, and reducing farming risks. Additionally, NABARD supports livelihood diversification for tribal communities, facilitating orchard development, animal husbandry, and micro-enterprise activities, thereby reducing migration and fostering rural prosperity.
Voluntary Carbon Market (VCM) in Agriculture
India has taken significant strides in sustainable agriculture with 11 projects registered under the Voluntary Carbon Market (VCM) on the Veera VCS platform. This initiative promotes low-carbon farming practices, positioning India as a leader in sustainable agricultural finance.
Digital Public Infrastructure: AgriStack and Precision Farming
The Modi government is leading the transition from input-intensive to knowledge-intensive farming through Digital Public Infrastructure (DPI) such as AgriStack. AgriStack serves as a Decision Support System (DSS), enabling data-driven insights for farmers. The Kisan Rin Portal, which connects over 1.89 lakh bank branches, ensures seamless access to financial resources. Additionally, NABARD, ICAR, and KVKs collaborate to advance natural farming, IoT-based precision agriculture, and AI-driven advisory services, reducing environmental impact while enhancing farm efficiency.
Nano Fertilizers and Drone Technology for Sustainable Farming
The promotion of nano-fertilizers like Nano Urea and Nano DAP has been a game-changer for Indian agriculture. The government has launched extensive awareness campaigns, field demonstrations, and supply chain improvements through Pradhan Mantri Kisan Samridhi Kendras (PMKSKs). Under the ‘Namo Drone Didi’ scheme, 15,000 women-led Self-Help Groups (SHGs) are being equipped with drones for fertilizer application, improving efficiency and reducing input costs. Additionally, the Department of Fertilizers (DoF) has initiated large-scale field demonstrations for Nano DAP adoption across the country.
Building a Farmer-Centric Value Chain with the Agri Infrastructure Fund (AIF)
AIF is playing a pivotal role in strengthening the agricultural value chain by decentralizing infrastructure and ensuring farmers receive 75-80% of consumer prices. The fund provides affordable financing for farm-level storage, cold storage, processing units, and value addition, reducing reliance on intermediaries and improving farmers’ income. Inspired by the dairy sector’s cooperative model, these initiatives ensure higher price realization for farmers while maintaining competitive consumer prices.
A Vision for Sustainable Agricultural Growth
The Modi government’s agricultural credit mechanisms are reshaping Indian agriculture by integrating climate resilience, financial accessibility, and technological innovation. From ensuring affordable credit through KCC and AIF to promoting renewable energy via PM-KUSUM and precision farming through AgriStack, these initiatives are making agriculture more sustainable, resilient, and profitable. By transitioning towards a knowledge-intensive farming model, India is not only securing its food future but also empowering millions of farmers with the tools and resources needed to thrive in a changing climate.
Through these visionary policies, the government continues to reinforce its commitment to doubling farmers’ income and ensuring that Indian agriculture remains globally competitive, sustainable, and future-ready.
