Executive Summary:
The Indian government provides financial support to farmers through various schemes to mitigate risks associated with adverse weather conditions. These initiatives include concessional loans, crop insurance, income support, natural calamity relief, and loan restructuring options. These schemes are implemented nationwide, including in states prone to weather disruptions like Andhra Pradesh, and are designed to prevent farmer loans from becoming Non-Performing Assets (NPAs) during times of crop failure.
Key Points / Main Content:
Financial Assistance and Loan Support:
* Modified Interest Subvention Scheme (MISS): Provides concessional interest rates on short-term agricultural loans via Kisan Credit Cards (KCC), offering a subsidized interest rate of 7% to farmers.
* An upfront interest subvention (IS) of 1.5% is provided to financial institutions.
* Farmers receive a 3% Prompt Repayment Incentive (PRI), reducing the effective interest rate to 4% per annum, if they repay loans promptly.
* Interest subvention is available on restructured loan amounts for the first year after natural calamities.
* Interest subvention and PRI on restructured crop loans are available for up to 5 years for farmers affected by severe natural calamities, based on reports from the Inter-Ministerial Central Team (IMCT) and the Sub-Committee of the National Executive Committee (SCNEC).
Crop Insurance:
* Pradhan Mantri Fasal Bima Yojana (PMFBY): Offers comprehensive risk insurance against crop damage from pre-sowing to post-harvest.
* The scheme is voluntary for states since inception and for all farmers from Kharif 2020.
* Protects against yield loss from non-preventable natural risks, extreme climate calamities, localized risks, and post-harvest losses.
* A yield index-based PMFBY and weather index-based Restructured Weather Based Crop Insurance Scheme (RWBCIS) were introduced from Kharif 2016.
* Premium subsidies are shared by the Central and State Governments at a 50:50 ratio (90:10 for North Eastern and other Hilly states).
Income Support:
* Pradhan Mantri Kisan Samman Nidhi (PMKISAN): Provides ₹6,000 per year to farmer families with cultivable landholdings, disbursed in three ₹2,000 installments.
Natural Calamity Relief:
* Financial relief is provided under the National Disaster Relief Fund (NDRF) for crop loss during natural disasters.
* State Governments offer relief through the State Disaster Response Fund (SDRF).
* Additional assistance is extended from the NDRF for severe disasters, based on assessments by the Inter-Ministerial Central Team (IMCT).
Loan Restructuring:
* The Reserve Bank of India (RBI) allows for loan restructuring in the event of natural disasters.
* Short-term loans (excluding overdue loans) are eligible for restructuring.
* Fresh loans can be sanctioned, and agricultural term loan installments can be rescheduled based on the borrower's repaying capacity and the nature of the calamity.
Impact Analysis:
Farmers:
* Impact: Farmers benefit from reduced interest rates on loans, insurance coverage against crop loss, direct income support, and loan restructuring options in the event of natural disasters.
* Action Required: Farmers should apply for Kisan Credit Cards (KCC) to access concessional loans, enroll in PMFBY for crop insurance, register for PMKISAN to receive income support, and contact their banks for loan restructuring when affected by natural calamities.
Financial Institutions (Banks):
* Impact: Banks receive interest subvention from the government for providing concessional loans to farmers. They are also required to restructure loans for farmers affected by natural disasters.
* Action Required: Banks should provide KCC loans at subsidized interest rates, process loan restructuring applications during natural calamities, and adhere to RBI guidelines on relief measures.
State Governments:
* Impact: State governments share the financial liability for premium subsidies under PMFBY and provide relief to affected populations through the SDRF.
* Action Required: State governments should contribute their share of premium subsidies for PMFBY, disburse funds from the SDRF during natural disasters, and coordinate with the central government for additional assistance from the NDRF.
Central Government:
* Impact: The central government bears the financial responsibility for implementing and funding schemes such as PMKISAN and PMFBY and provides additional support through the NDRF during severe disasters.
* Action Required: The central government must ensure timely disbursement of funds for PMKISAN, PMFBY, and NDRF, and coordinate with state governments to assess and address the impact of natural disasters.
Key Entities Referenced
Andhra Pradesh: A state in India, mentioned as a region prone to weather disruptions and where certain schemes are implemented.
PM Kisan: An abbreviation for Pradhan Mantri Kisan Samman Nidhi, a central sector scheme providing financial assistance to farmer families.
PMFBY: An abbreviation for Pradhan Mantri Fasal Bima Yojana, a crop insurance scheme providing financial protection against crop loss due to natural calamities.
Kisan Credit Cards KCC: A credit card scheme providing concessional interest rates on short term agricultural loans to farmers.
Reserve Bank of India RBI: The central bank of India, which allows for restructuring of loans in the event of natural disasters.
National Disaster Response Fund NDRF: A fund providing financial assistance to states in the event of a disaster of a severe nature.
State Disaster Response Fund SDRF: A fund at the disposal of State Governments to provide financial relief to affected people in the wake of notified disasters.
Modified Interest Subvention Scheme: A scheme that provides concessional interest rates on short term agricultural loans to farmers through Kisan Credit Cards.
GOVERNMENT OF INDIA
MINISTRY OF AGRICULTURE AND FARMERS WELFARE
DEPARTMENT OF AGRICULTURE AND FARMERS WELFARE
LOK SABHA
UNSTARRED QUESTION NO. 1503
TO BE ANSWERED ON 29TH JULY, 2025
FINANCIAL RELIEF MEASURES TO FARMERS PRONE TO WEATHER
DISRUPTIONS
1503. SHRI P V MIDHUN REDDY:
Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ(cid:874)ष और (cid:873)कसान क(cid:227)याण मं(cid:287)ी
be pleased to state:
(a) the details of support mechanisms which are in place to assist farmers in avoiding their
loans from becoming NPAs, especially during adverse weather conditions affecting crop
yield;
(b) the details of financial relief, restructuring options or waivers available to affected
farmers;
(c) whether there are any region-specific programs being implemented especially for States
prone to weather disruptions like Andhra Pradesh; and
(d) if so, the details thereof?
ANSWER
THE MINISTER OF STATE FOR AGRICULTURE AND FARMERS WELFARE
कृ(cid:874)ष एवं (cid:873)कसान क(cid:227)याण रा(cid:207)य मं(cid:287)ी (SHRI RAMNATH THAKUR)
(a) to (d): The Government of India is implementing several scheme to provide financial
assistance to farmers and to mitigate their financial risks including to protect them during
periods of adverse weather conditions that impact crop yield, e.g. PM Kisan, PMFBY and
MISS. Details of some of the major initiatives which are also implemented in Andhra
Pradesh, are as under:
1. Under Modified Interest Subvention Scheme concessional interest rates on short-
term agricultural loans are provided to farmers through Kisan Credit Cards (KCC) for their
working capital requirements.
Under this scheme, farmers receive KCC loans at a subsidized interest rate of 7%.
To facilitate this, an up front interest subvention (IS) of 1.5% is provided to financialinstitutions. Additionally, farmers who repay their loans promptly receive a 3% Prompt
Repayment Incentive (PRI), effectively reducing the interest rate to 4% per annum.
To provide relief to the farmers on occurrence of natural calamities, the component
of interest subvention is available on the restructured amount to banks for the first year
and such restructured loans would attract normal rate of interest from the second year
onwards as per the policy laid down by RBI.
Interest subvention and prompt repayment incentive on restructured crop loans is
also given to farmers affected by severe natural calamities for a maximum period of 5
years based on the report of Inter-Ministerial Central Team (IMCT) for grant of NDRF
assistance and Sub-Committee of National Executive Committee (SC-NEC).
2. Pradhan Mantri Fasal Bima Yojana (PMFBY): As a support mechanism to assist
the farmers, PMFBY provides for comprehensive risk insurance against crop damage from
pre-sowing to post-harvest for crops and area notified by the concerned State
Government. The scheme is voluntary for the States since inception and for all farmers
w.e.f. Kharif 2020.
The scheme not only safeguards against wide spread yield loss due to non-
preventable natural risks/ & extreme climate calamities viz. flood, inundation, landslide,
drought, heat waves, hailstorm, cyclone, pests/diseases, natural fire and lightening,
storm, typhoon, tempest, hurricane, tornado etc. but also against farm level yield loss due
to localized risks (hailstorm, landslide, inundation, cloud burst and natural fire) and post
harvest losses due to cyclone, cyclonic/unseasonal rain and hailstorm and prevented
sowing. Under this crop insurance scheme, farmers are provided financial protection
against crop loss due to natural calamities. In case of crop failure, the insurance
compensates the loss, allowing farmers to meet their loan obligations and prevent NPAs.
To provide financial support to farmers at the time of losses due to natural
calamities, a yield index-based Pradhan Mantri Fasal Bima Yojana (PMFBY) and weather
index based Restructured Weather Based Crop Insurance Scheme (RWBCIS) have been
introduced in the country from Kharif 2016 season. It is a demand driven scheme and
financial liability on premium subsidy to farmers is shared by the Central and State
Government on 50 : 50 basis and 90 : 10 in North Eastern States & other Hilly states, with
effect from Kharif 2020 season. The scheme is voluntary for the States since inception
and for all farmers w.e.f. Kharif 2020.
3. Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)- The Pradhan Mantri Kisan
Samman Nidhi (PM-KISAN) is a Central Sector Scheme, launched in February 2019 by
Hon’ble Prime Minister of India. The Scheme aims at providing financial assistance tofarmer families with cultivable landholding, subject to certain exclusion criteria, to enable
them to take care of expenses related to agriculture and allied activities. Under the
Scheme, an amount of Rs. 6000/- per year is transferred in three 4-monthly installments of
Rs.2000/- per farmer family.
4. Natural Calamity Relief: Farmers are also provided relief under National Disaster
Relief Funder for the crop loss during natural disaster. The State Governments provide
financial relief to the affected people in the wake of notified disasters, including drought
from the State Disaster Response Fund (SDRF), already placed at their disposal.
However, in the event of disaster of a severe nature, additional financial assistance is
extended from the National Disaster Response Fund (NDRF), as per the laid down
procedure, which includes an assessment based on the visit of an Inter-Ministerial Central
Team (IMCT). The financial assistance provided under SDRF and NDRF is by way of relief
and not for compensation.
5. Loan Restructuring: In the event of natural disasters, the Reserve Bank of India
(RBI) allows for restructuring of loans. Reserve Bank has issued Master Directions – Relief
Measures by banks in areas affected by Natural Calamities 2018 dated October 17, 2018,
separately to Scheduled Commercial Banks and to RRBs. As per the Master Directions, in
the event of natural calamities declared by the State/Central Government all short-term
loans, except those which are overdue at the time of occurrence of natural calamity, shall
be eligible for restructuring. Fresh loans can also be sanctioned by banks to affected
borrowers. Agricultural term loan installments shall also be rescheduled keeping in view
the repaying capacity of the borrower and the nature of natural calamity. This ensures that
farmers are not unduly burdened during crop failure or damage due to natural calamities.
All the above schemes are being implemented in the country including Andhra
Pradesh to assist farmers during adverse weather conditions and to mitigate their
sufferings due to natural calamities affecting their crops.
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