Evolution of Agricultural Credit in India – A Review

Abstract

Agriculture is an important sector of Indian economy by its role played in the generation of employment opportunities, increasing agricultural outputs and Gross Domestic Product. For developing this sector further is in need of credit support, because agricultural credit is an important one for the development of agricultural sector sand it helps to adopt modern farm equipments and technologies. Though, any amount of agricultural credit even at the most realistic rates cannot assure to the higher efficiency, output or sufficient income to the farmers, since the achievement depends upon numerous other variables counting the accessibility of inputs like seeds, fertilizers, pesticides, supportive services and profitable markets for the produces. The agricultural credit policies in India intended and executed mainly as supply driven in the course of embattled ground level credit, interest financial support scheme and directed lending by Priority Sector Lending guidelines. These policies beside with other guiding principle interventions at the Government and Reserve Bank of India level have succumb praiseworthy results in sanctioning agricultural credit. Though this much supports have given to this sector, it still with lots of challenges such as poor capital formation, difference among the regions, small size of land holding, more number of tenant farmers, landless and poor labourers and share croppers on non-institutional sources of credit at considerably upper rates, non-realization of the fair price for agricultural produce causing farmers’ suffering and number of farm loan waivers impacting credit culture and deteriorating state finances. With this background the present paper

made an attempt to address the issues being faced by farmers in accessing agricultural credit, current situation of agricultural finance in India, measures taken by the government to improve the credit, drawbacks of the measures taken and steps to improve.