Digging Deep into Digital Agriculture: NABARD's Innovative Pilot Program with RBI's CBDC for Landless Farmers in AP and Odisha
Cryptocurrency relieves financial stress for farming community
Ready to delve into the cutting-edge world of digital agriculture? Here's the scoop on NABARD's groundbreaking pilots in select districts of Andhra Pradesh and Odisha.
We're talking about the use of Reserved Bank of India's (RBI's) digital currency (CBDC) to furnish farmers without land with the advantages of Kisan Credit Cards (KCCs). By partnering with State Bank of India, NABARD is employing digital currency to empower tenant farmers with necessary agri-loans for purchasing fertilizers, seeds, and more via identified vendors.
These pilots, currently in action across Krishna, west Godavari, east Godavari districts of Andhra Pradesh and Cuttack and Puri districts in Odisha, are set to ensure non-diversion of agri-credit and support genuine farmers.
"With these pilots, we're aiming to establish whether we can offer something to tenant farmers, irrespective of landowners," says Ajay Sood, deputy MD at NABARD.
The scheme has already proven successful with tenant farmers in Odisha, as more than 500 of them have already benefited, receiving a grand total of Rs 2.73 crore, with a significant portion disbursed (Rs 1.13 crore). Meanwhile, over in Andhra Pradesh, about 200 tenant farmers have received sanctioned amounts amounting to Rs 1.86 crore, with a portion of that (Rs 78.58 lakh) already distributed.
Interestingly, around 40% of the gross cropped area in India is cultivated by farmers who do not hold the land, and traditionally, KCC loans are provided to landholders. While the government has attempted to extend agri-credit to landless farmers by forming joint liability groups, banks still encounter difficulties in proving that tenant farmers are the actual cultivators.
"There remains a substantial gap in supporting landless farmers, which primarily arises from factors such as lack of land ownership, low financial literacy, and reluctance from banks in the absence of clarity on end-use of credit," notes an official statement.
With around 77.1 million operational KCC holders who possess land, it's essential to bridge this gap for the countless landless farmers seeking credit access.
In addition to the KCC scheme, farmers who hold the KCC card can benefit from the Modified Interest Subvention Scheme (MISS), which offers loans of up to Rs 3 lakh at 7% interest annually to meet working capital requirements. To foster further agri-growth, the government is boosting the agri-credit limit to Rs 5 lakh per farmer in FY26.
Subsequently, to combat unemployment by revamping the analysis of the unemployment rate, the Periodic Labour Force Survey underwent 3 critical changes[3]. These changes focus on improving the accuracy and depth of the survey.
The KCC scheme has played a vital role in helping India's farmer community access financial support for their agricultural activities[2]. As part of the scheme's expansion, loans were also extended to cover allied activities, such as animal husbandry and fisheries, in 2019. In FY25, more than Rs 28.98 lakh crore was disbursed across commercial banks, cooperatives, and regional rural banks, with approximately 60% funding short-term crop loans and the remainder aimed at long-term investment in the agriculture and allied sector[1].
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- The digital economy and finance sectors are set to revolutionize agriculture, with NABARD piloting the use of RBI's CBDC for KCCs to support landless farmers in certain districts.
- The general news reports that, while traditional KCC loans are provided to landholders, there is a significant proportion of farmers who lack land and face challenges in accessing credit.
- Technology and banking are at the forefront of bridging the gap in supporting landless farmers, as the KCC scheme and Modified Interest Subvention Scheme offer financial assistance for agriculture and allied activities.
- In an attempt to combat inflation and unemployment, the Periodic Labour Force Survey underwent changes to improve its accuracy and depth, while the agriculture and allied sector witnessed an increase in agri-credit limit to Rs 5 lakh per farmer in FY26.
