Agricultural Credit in India: An Economic Assessment with Special Reference to Post Reform Period

Abstract

This study is an attempt to examine the trend and pattern of agricultural credit in India with special focus on post reform phase. Though it has titled as special reference to post reform phase but the analysis part has considered pre reform phase for clear cut and better understanding. Not only the study has taken this part but also some major problems that our agricultural credit is facing and policies of government related to Agricultural credit has analysed in this paper. In the initial phase of agricultural system farmers were completely dependent on money lenders, landlords and other informal sources to survive their cultivating system. At the time of inception of planning (1951) more than 90% people took the help of these non- institutional sources. As a result, they were completely exploited by their lender groups in form of exorbitant rate of interest charge, providing free services to their credit owners and sudden sell of their agricultural product at lower price. With the development of society, new mottos, new thinking, and new government provision, a transformation of farmers has been seen from the financial point of view. Now people are attracting towards the institutional credit structure. As per AIDIS 2013 report nearer to 56% people are dependent on banking institutional sources of credit for their financial need. SCBS and Cooperative banks are playing an emerging role for agricultural credit funding. In context of direct as well as indirect credit SCBs and Cooperative credit is the best credit provider in time of post reform phase respectively. On the basis of time though a huge gap between short- and long-term credits is being seen still it is the concentrated area of discussion in this paper. Government has mainly focussed on southern region of our country. On the basis of state Maharashtra, Tamil Nadu and West Bengal are the largest agricultural credit captured area. Because of lack of profile issues poor farmers are the neglecting part of the agricultural credit share. In the report of 2002-03 of EPWRF it has mentioned rich farmers are getting 238.3 % finance from SCBs while 211.3% for poor farmers. Credit inadequacy, deficient amount of sanctions, prevalence of middle man system etc. are the major constraints for the improvement of agricultural credit. Our government is taking attention on these issues and launching many policies and schemes related to agricultural credit to improve the status of farmers and ultimately condition of agriculture in our country.