Budget will focus on farm loan reform, credit limit hike

Easy loan repayment rules, and higher credit limits among the proposals under consideration

- Dhirendra Kumar & Rhik Kundu

The upcoming budget is expected to ease repayment norms and raise credit limits among several initiatives to bolster agriculture amid weather-related challenges, two people aware of the matter told Mint.

In the past few years, monsoon disruptions have impacted agriculture, leading to shortages and food price inflation apart from hurting farmers' livelihoods.

The Centre is considering easing repayment norms for farmers by allowing them to settle the entire loan interest at one-go at the end of the tenure instead of having to make periodic payments.

The idea is to mitigate liquidity constraints during cultivation, the first person mentioned above said, requesting anonymity.

"The government is also considering raising the agricultural loan credit limit, unchanged at ₹3 lakh since 1998, to ₹4-5 lakh reflecting rising input costs and current financial needs," the person mentioned above added.

The move aims to support the agricultural sector amid escalating costs and provide farmers with more accessible and flexible credit options.