Expectations from Union Budget 2026: Agri sector’s access to finance

In recent years, the Budget has prioritized expanding rural credit access, strengthening interest subvention and positioning the Kisan Credit Card (KCC) as the backbone of farm financing. About 7.75 crore KCCs were operational as of March 2024, and nearly 5.9 crore farmers have been mapped under the Mission for Saturation of KCC (MISS KCC) scheme through the Kisan Rin Portal². Microfinance offers flexibility for non-farm needs but at higher costs (12%–20%). In contrast, KCC provides subsidized crop loans at an effective 4% interest rate, making it a cornerstone of affordable farm credit³. The next phase in Kisan Credit Card expansion must move from scale to effectiveness by deepening coverage, simplifying access and aligning credit more closely with farm-level realities. 
 

Women farmers’ credit will likely to be a key focus area. Periodic Labour Force Survey (PLFS) data shows that the share of women workers in agriculture rose from 57% in 2017–18 to 64.4% in 2023–24⁴. Nearly 77% of rural working women remain engaged in agriculture⁵. However, this rising participation has in most cases not translated into financial inclusion and proportional access to formal farm loans. Gaps persist in account ownership, access to collateral-free credit, and integration with cooperatives and self-help groups. These gaps are shaped by household-level asset ownership patterns, which can limit women’s control over financial decisions and increase exposure to debt without corresponding agency. Union Budget 2026 could create opportunities to begin narrowing this disconnect between participation and access.

A pivotal moment for agricultural credit

While the government has signaled intent to expand agricultural credit, Union Budget 2026 is expected to clarify how this will translate into outcomes while addressing KCC challenges like borrower segmentation, as KCC primarily serves cultivators/sharecroppers. The Reserve Bank of India has raised the collateral-free agricultural loan limit from INR1.6 lakh to INR2 lakh per borrower and aligned it with priority-sector lending norms⁶. Even so, credit growth has moderated, with bank lending to agriculture and allied activities growing 10.4% y-o-y as of March 2025, down from 20% a year earlier⁷. 
 

More critically, the composition of credit remains skewed. Long-term investment credit for irrigation, storage, climate-resilient infrastructure and mechanization continues to lag short-term crop loans. The Budget can build on recent reforms by improving credit appraisal, strengthening risk-mitigation frameworks and incentivizing diversification into allied activities such as dairy, fisheries and horticulture.

What Union Budget 2026 can focus on:

Union Budget 2026 must focus on three priorities—improving credit depth and quality, strengthening KCC and e-KCC adoption, and enhancing access to credit for women farmers. 

• Set clearer targets for agricultural and allied credit, with a push toward low-credit-intensity regions and investment-led lending.

• Link crop loans with medium- and long-term financing for irrigation, mechanization and climate-resilient assets.

• Strengthen digital credit appraisal through the Kisan Rin Portal to reduce delays and improve underwriting quality.

• Accelerate universal e-KCC adoption through Aadhaar-based verification and integration with land records and crop data.

• Rationalize KCC sub-limits for allied activities to reflect evolving farm models and climate risks.

• Set measurable targets and interest-subvention support for women-owned and jointly held KCC accounts.

With agriculture contributing about 18.2% of GDP (at constant prices)⁸ and employing nearly half the workforce, Union Budget 2026 can reinforce a more resilient and inclusive credit ecosystem by addressing structural gaps while aligning incentives with sustainability, diversification and long-term growth. These measures will not only help in improving rural credit access through policy reforms but also accelerate India’s transition toward climate-smart agriculture