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With a view to giving a boost to agricultural lendings, public sector banks were
asked to prepare by June 1994,
special agricultural credit plans
(SACPs) for
1994-95 and thereafter and thus meet the agricultural credit sub-target of 18%
under the priority sector. For this purpose, some changes were introduced in
the scope of priority sector advances; for agriculture in particular, direct and
indirect advances were allowed to be clubbed together for meeting the 18%
sub-target, though with some limit on indirect lendings to be counted as part
of the priority sector.
It is based on the above system of
special agricultural credit plans
that the RBI has been obtaining control returns from commercial banks from
1995-96 onwards and transmitting them to NABARD, and NABARD in turn
has been compiling the data on aggregate credit disbursements for agriculture
by combing RBI figures on scheduled commercial banks and its own control
returns on RRBs and the cooperative sector. The kink in the series referred
to above has thus come about because the RBI data on farm credit from
commercial banks have covered both direct and indirect advances.
Finally, anyone who tries to study the trends in disbursements of farm
loans will be aghast at the divergences observed between the data put out by
NABARD on the flow of total ground-level credit and those published in the
successive issues of RBI’s annual publication
Handbook of Statistics on the
Indian Economy
which is supposedly most up-to-date. As depicted in Table
4.31, these differences, which were very high at 182% in 1999-2000, have been
gradually receding. Even so, the year 2007-08 for which comparable data are
available, faced a difference of 50%.
Such differences give rise to serious misgiving regarding the quality of
reportings on the performance under the priority sector. Research workers
find it difficult to relate the intensity of credit in, say, agricultural output and
work out such analytical ratios as the production elasticity of bank credit.
Is it not possible for RBI and NABARD to coordinate and putout for public
consumption uniform sets of data on outstandings and flows of agricultural
credit so that misgivings on the quality of data base can be obviated?
Continued Relevance of Agricultural Credit Target
Within the priority sector, the case for targeted lending for the
agricultural sector appears the strongest. Those propagating financial sector
reforms are influenced by the philosophy as advanced by the Narasimham
Committee (November 1991) that “Marco credit guidance should continue to be
legitimate aspect of developmental credit policy but micro credit intervention
sometime bordering on behest lending, should be eschewed” (p.42). Based on
