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initial decade of the 1970s, there was a slowdown particularly after the second
half of the 1980s which continued until the early 1990s. In fact, during the
1990s as a whole, the annual growth in outstandings of agricultural credit was
generally lowest at less than 10% in many years; it was high at 16.6% during
the 1970s as it was over a low base and it fell to an average growth of 13.8%
during the 1980s and to 13.4% in the 1990s. There has been a remarkable
pick-up in farm credit growth thereafter, to an average of 19.2% per annum
during 2001-02 to 2009-10 (Table 5.1).
The lowest growth in farm credit outstandings in the 1990s is officially
explained thus:
“This is partly due to writing-off of agricultural debts under Agricultural
Debt Relief Scheme of 1990 and partly because of various factors like the
vitiated recovery climate and the unsatisfactory recovery performance,
lack of requisite infrastructure and inadequate support and cooperation
from the concerned development agencies of the State Governments and
banks’ hesitation in lending to high risk borrowers due to the introduction
of prudential norms relating to income recognition, assets classification,
provisioning and capital adequacy” (
Economic Survey 1994-95,
p.51-52).
There is an interesting difference between the growth in loans
outstandings and loans issued. After the loan waiver of 1990, the loans
outstandings grew at historically lower rates for nine years 1990-91 to
Table 5.1: Average Annual Growth Rates in Agricultural Credit:
1970s, 1980s, 1990s
(Per cent Per Annum)
Period
Co-operatives Commercial
Banks
Scheduled Commercial
Banks and RRBs
Total
Total Loans Issued
1971-72 to 1981-82
12.9
29.9
31.4
17.4
1981.82 to 1991-92
9.3
13.7
13.6
10.7
1991-92 to 2001-02
19.4
15.0
16.1
17.1
2001-02 to 2009-10
12.1
34.9
33.7
24.1
Total Loans Outstanding
1971-72 to 1981-82
11.7
29.6
30.6
16.6
1981.82 to 1991-92
9.8
17.3
17.7
13.8
1991-92 to 2001-02
17.5
10.3
11.0
13.4
2001-02 to 2009-10
6.0
27.8
27.8
19.2
(for details, see Annexures L and M).
Note:
Growth rates are averages of annual growth rates.
