Current issues in agriculture credit in India: An assessment (original) (raw)
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Challenges of Agriculture Credit in India
International Education and Research Journal, 2020
Agriculture plays a significant role in the Indian economy and provides employment and livelihood to a large section of the Indian population. Approximately 44% (as per ILO estimate of 2018) of the working population is employed in agriculture and allied sector. However, the contribution of agriculture to GDP has been declining from 52% in the 1950s to 30% in the 1990s and further below 20% from 2010 onwards as per data from Ministry of Statistics and Programme Implementation (MoSPI). In 2018-19, the share of Agriculture & Allied Gross Value Added (GVA) in overall GVA was 16% (Ministry of Agriculture and Farmers' Welfare (MoA&FW) Annual Report 2018-19). Economic Survey 2018-19 suggests that the growth rate in GVA (at 2011-12 prices) over past five-six years has been higher for livestocks, fishing and aquaculture as compared to crops. Allied activities contribute approximately 40% to agricultural output, whereas only 6-7% of agricultural credit flows towards allied activities. De...
Agriculture is the backbone of Indian economy. So it has all along been treated as a priority sector for the allocation of the institutional credit. The agricultural credit, particularly the institutional credit, has been to play a significant role in the agricultural development of India. Various institutional agencies are engaged in the payment of credit to agricultural sector i.e. scheduled commercial bank, regional rural banks, co-operative credit societies, co-operative banks etc. with their vast network, wider coverage and outreach extending to the remotest part of the country, the co-operative credit institutions, both in short and long term structure are the main institutional mechanism for dispensation of agricultural credit. An attempt has been made in the present paper to analyze the position of agricultural credit in India.
Agricultural Credit Policy in India -Need for Shift from Supply- Led To Demand-Driven Credit
In pursuance to the recommendations of the All India Rural Credit Review Committee [1969] the Government of India directed the nationalized banks including the State Bank Group & later on private sector commercial banks to finance farmers in order to significantly increase food output in particular and substantially raise agricultural growth rate in general. Government, also, adopted a multi-agency approach involving vast rural network of cooperative credit institution and regional rural banks. From time to time the Government introduced a plethora of directives virtually regulating the banks beyond one can expect. In the process, approach to agricultural credit policy in India and many developing countries since the 1960s has been " supply-led rather than demand-driven " which of course facilitated farmers to usher in Green Revolution. However, over a period of time this approach resulted into large-scale over dues building huge amount of non-performing assets, making banks financially unviable and forcing the Government to recapitalize them, among others. In this context, this development perspective article attempts to briefly highlight pertinent aspects of supply-led approach and suggests the immediate need to search & reinvent the agricultural credit delivery approach emphasizing demand-driven
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A sample of 50 households (25 households each from Kolhapur and Pune) was chosen over the period 1995-96 - 1999-2000 to basically study the credit experience of farming families depending on land holding size. Relative importance of formal and informal credit agencies in aggregate loans taken by small, marginal and large farmers, purpose of the loans, default rates, prevalence of excess demand for loans, if any have been analysed. One novel idea employed in the paper is that instead of credit rating agencies assessing the loan repayment capability of borrowers. the authors find out the length of relationship between a lender and its borrowers. Thus, small and marginal farmers may be seen to be the most trusted partners of cooperatives.