On 16 December 2024, the Government of India launched the Credit Guarantee Scheme for e-NWR Based Pledge Financing (CGS-NPF), a significant step towards strengthening post-harvest financing and addressing financial challenges faced by farmers. The scheme has been allocated a ₹1,000-crore corpus to enable farmers to access credit by pledging their produce stored in Warehousing Development and Regulatory Authority (WDRA)-accredited warehouses, using electronic negotiable warehouse receipts (e-NWRs) as collateral. This initiative is designed to reduce the occurrence of distress sales and improve the financial accessibility for farmers, promoting the development of more warehouses closer to farmlands.
Union Minister of Consumer Affairs, Food and Public Distribution, Shri Pralhad Joshi, has called on the WDRA to expand its reach and increase warehouse accreditation to benefit more farmers. This move aligns with the government’s broader objective to enhance the agricultural sector, which contributes 17.7% to India’s Gross Value Added (GVA) in FY 2024, and provides employment to nearly half of the country’s workforce.
The CGS-NPF scheme represents a key initiative in India’s push toward Aatmanirbhar Bharat, fostering self-reliance and empowering farmers through enhanced financial support.
Overview of the CGS-NPF Scheme
The CGS-NPF scheme has already generated substantial demand, particularly from the banking sector, with its focus on increasing post-harvest lending based on e-NWRs. By improving farmers’ access to institutional credit, the scheme aims to raise incomes and financial inclusion.
The scheme prioritizes small and marginal farmers, women farmers, Scheduled Castes (SC), Scheduled Tribes (ST), and Divyangjan (PwD) farmers, offering them a minimal guarantee fee and higher coverage for smaller loans. Additionally, small traders (MSMEs), Farmer Producer Organisations (FPOs), and farmer cooperatives are also beneficiaries, which further supports equitable access to financing.
Salient Features of CGS-NPF Scheme:
Post-Harvest Financing: Farmers can pledge stored produce to access credit, reducing distress sales during peak harvest times.
Inclusivity: Special focus on marginalized farmers, women, and smallholder groups, ensuring broad participation.
Minimal Guarantee Fee: Ensures affordable access to credit for all eligible farmers and small traders.
Support for Warehouse Development: Encourages the establishment and accreditation of warehouses close to farmlands, boosting infrastructure and storage capacity.
Other Key Agricultural Credit and Financial Support Schemes
India’s agricultural finance landscape is also supported by other key initiatives:
Kisan Credit Card (KCC)
Launched in 1998, the KCC scheme provides farmers with easy access to agricultural inputs and cash for production needs. In February 2019, the Reserve Bank of India (RBI) extended the KCC facility to include Animal Husbandry and Fisheries for working capital. As of 31st March 2024, there are 7.75 crore operative KCC accounts.
Modified Interest Subvention Scheme (MISS)
The MISS provides concessional short-term agri-loans for crop and allied activities, with an interest rate of 7% on loans up to ₹3 lakh. A 3% subvention for timely repayment reduces the effective rate to 4%. The scheme also extends post-harvest loans against NWRs for farmers with KCCs. Since 2014-15, institutional credit to agriculture has tripled from ₹8.5 lakh crore to ₹25.48 lakh crore by 2023-24, while concessional crop loans have more than doubled from ₹6.5 lakh crore to ₹15.07 lakh crore.
Conclusion
The CGS-NPF scheme is a crucial move in enhancing the agricultural financing ecosystem, addressing the gap in post-harvest credit access, and reducing distress sales. With a ₹1,000-crore corpus, the scheme offers greater access to credit for small and marginalized farmers, women, and other vulnerable groups, making it a powerful tool for financial empowerment in rural India.
This initiative complements other government efforts, including the Kisan Credit Card (KCC) and the Modified Interest Subvention Scheme (MISS), to strengthen agricultural welfare, boost productivity, and promote financial inclusion.
Together, these schemes reflect India’s commitment to building a resilient, self-sustaining agricultural sector, which is vital for the country’s overall economic growth and the vision of Aatmanirbhar Bharat. As more farmers benefit from these financial mechanisms, India’s agricultural landscape is poised for long-term stability and growth.
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