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Foreword
Malcolm Lyall Darling (1925) in his often quoted seminal work had said
“
Indian farmer is born in debt, lives in debt and dies in debt”
. Since then,
government, banks and other institutions have been striving to change the
above state of affairs. The results are easy to see. One major change is the
substantial increase in the share of institutional agencies in the total credit
availed by farmers from a low of 7.3% in 1951 to 61% in 2002 (All India
Debt and Investment Surveys, Various Rounds, NSSO). Yet, agriculture credit
and its outreach has always remained a major concern for the policy makers,
especially in the last decade. Growth in agriculture credit by itself has not been
without consequential issues, which need detailed and objective analysis.
In this backdrop, NABARD through its Research & Development Fund had
sponsored the Study titled, ‘Agricultural Credit in India : Trends, Regional
Spreads and Database Issues’. EPW Research Foundation (EPWRF), a premier
research organisation had undertaken this work. A defining feature of the study
is its long term perspective in which it has analysed in great detail, the various
issues pertaining to agriculture credit in India. Further, the study has done a
credible job of addressing in one place, most issues confronting the subject.
The study has highlighted that the volume of agriculture credit flow has
increased substantially (presently growing at 20% per annum) but the coverage
in terms of physical numbers could have done better, as still around 8 crore
farmers are outside the institutional credit net. The study has delved at length
in bringing out the various inequities in the flow of agriculture credit which is
not in conformity with the real sector indicators- regional disparities, skewed
distribution among various categories of farmers, the falling per account
figures for small accounts etc. Critical analysis of some of the recent policy
measures such as doubling of agriculture credit, interest rate subvention,
against the backdrop of some of the above trends forms part of the report.
Crop loans continued to form the majority share and today almost 85% of the
entire input costs of farmers are now being financed by it. Within the term loan
category, a substantial share is contributed today by allied activities (animal
husbandry, fisheries, horticulture etc) as opposed to direct investment in
agriculture(minor irrigation, land development etc). Perhaps this mirrors the
changing composition of the agricultural GDP. At the all-India level, the study
revealed that during the period 1971-72 to 2009-10, the credit intensity ratio
(farm credit to agricultural GDP ratio) has shown a significant improvement
from around 10% in the early 1970s to over 40%.
