UP gobern6 Moves to Expand Affordable Institutional Credit for Small and Marginal Farmers and Approves Krishak Samriddhi Yojana with 5% Interest Subsidy on Farm Loans
The Uttar Pradesh Cabinet has approved the Mukhyamantri Krishak Samriddhi Yojana to facilitate long-term credit for small and marginal farmers through the Uttar Pradesh Cooperative Gram Vikas Bank. The scheme is designed to address the structural financing constraints faced by farmers who often encounter limited access to affordable agricultural investment credit.
Under the proposed framework, eligible small and marginal farmers will be able to access loans of up to ₹6 lakh at a concessional annual interest rate of 6 percent. The State Government is expected to provide a 5 percent interest subsidy on eligible loans, subject to timely repayment of scheduled instalments. This conditional subsidy mechanism creates a direct linkage between financial support and repayment discipline.
The policy is particularly significant from a rural financial-governance perspective because small and marginal farmers constitute approximately 92 percent of the State’s farming households, according to the Cabinet document. Existing institutional constraints and comparatively high refinancing costs have contributed to higher lending rates, affecting farmers’ capacity to undertake productive agricultural investment.
The proposed intervention seeks to redirect credit towards long-term asset creation and agriculture-linked economic activity rather than short-duration consumption requirements. Lower-cost institutional finance can potentially improve farmers’ capacity to invest in productive assets, thereby supporting sustained productivity enhancement and income generation.
The State has also provided for ₹384 crore of financial assistance over five years for interest subsidy and, over two years, for modernisation and branding of bank branches.
The Krishak Samriddhi Yojana is expected to strengthen financial inclusion among small and marginal farmers by improving access to affordable institutional credit. The 5% interest subsidy can reduce the effective cost of farm loans, enabling farmers to invest more effectively in seeds, irrigation, equipment and other agricultural inputs. By expanding formal credit access through cooperative banking channels, the initiative can reduce dependence on informal borrowing, improve repayment capacity, and support more stable farm-level investment. In the broader governance context, the scheme can contribute to rural economic resilience, strengthen cooperative credit delivery, and promote inclusive agricultural growth across Uttar Pradesh.
The initiative therefore represents a credit-governance approach combining subsidised finance, repayment-linked incentives, institutional strengthening and long-term rural capital formation.
