Agricultural Economics Research Review
Year : 2012, Volume : 25, Issue : conf
First page : ( 561) Last page : ( 561)
Print ISSN : 0971-3441. Online ISSN : 0974-0279.

Analysis of Agricultural Credit and Capital Formation in Indian Agriculture: A Comparison of Pre-reform and Post-reform Status

Raj M. Michael

Department of Economics, St. Stephen's College, Pathanapuram – 689 695, Kerala

Online published on 9 October, 2012.

Abstract

Agricultural credit is the crucial input which helps in increasing farm production and productivity. The paper has analysed the growth and trend of institutional credit in Indian agriculture, both short-term and long-term. A comparative analysis has been presented of long-term credit and capital formation in Indian Agriculture in pre-reform and post-reform periods. The multi-agency approach comprising commercial banks, regional rural banks and cooperative banks followed by the government has helped in increasing the timely availability of credit to agriculture in quantitative terms but its qualitative aspect is still a matter of concern. The study has revealed that although the share of commercial banks in total agricultural credit has increased over the years, in most of the states the growth in agricultural credit disbursed by commercial banks has depicted a declining trend in the post-reforms period. Reduction in cooperative banks’ credit and slow growth in commercial banks’ credit to agriculture in the post-reforms period have led the re-emergence of money lenders in rural agriculture credit marketing system in recent years. This has increased the debt problem among marginal farmers and has led to increasing farmers’ suicides in the country. Therefore, a policy initiative is needed to strengthen the cooperative credit system along with reduction in disparities of commercial banks in agricultural credit allocation across the states.

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Keywords

Agricultural credit, agricultural policies, commercial bank, regional rural banks, cooperative banks.

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