Trends in Agricultural Credit

Agriculture sector is playing a significant role in the development of rural areas in our country. Agriculture is the main occupation and still is a strong means of livelihood and there is necessity for ensuring sustainability in these livelihoods. Agriculture and allied sectors contribute nearly 22% of GDP of India and further 9.93% contribution in total export of India. Rural indebtedness, agricultural distress, dependency on private money lenders, and farmers suicides are common features surrounding Indian Agriculture. For more than 100 years RBI and Central Government have been making efforts to enhance institutional credit in rural areas particularly to assist agricultural operations. But economic survey (GOI) 2010 shows that out of 27 public sector banks, only 14 sector banks achieved the agricultural credit target of 18% agricultural credit and in case of private sector banks only 8 achieved the target of 18% for lending to agriculture in 2009. In order to increase productivity a huge investment on agriculture is essential. Farmers need more capital in order to buy qualitative seeds, agricultural implements, power tiller, adoption of latest technology. But Indian agriculturist is not only capital scared but also faces natural vagaries in addition to unfavorable voltaile marketing conditions. Hence he needs credit for the agricultural expansion programmes. Credit enables the agriculturist to extend control over his ownership of resources. The much spoken debt relief and waiver only touched the rich agriculturist leaving small and marginal farmers not caring. Further debt waiver and relief a most ambitious programme did not succeeded as expected and programme could not be carried out successfully because of faulty implementation.