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of 70% and 30% respectively in the early 1990s. This increase in the role of
commercial banks on a more rapid scale has happened after the forced lending
that began since 2004-05.
Second, in the total ground-level credit, an overwhelming proportion is
absorbed by crop loans – about 72%. Even this phenomenon got accentuated
after the phenomenon of doubling of bank credit began to operate in its second
round from 2006-07 onwards. Earlier, the share of term loans had gradually
risen from about 35%-37% to 40%-42%. Since then, with the increase in short-
term loans, the share of term loans has dropped to about 28% by 2010-11
Third, interestingly, even in crop loans, cooperatives have lost ground,
with the decline from about 70% in the early 1990s to around 27 to 28%,
appearing glaring. In term loans, the commercial banks have always been
dominating and it has been on an increasing scale. About 85% of the term
loans are rendered by commercial banks and RRBs. But, this high share of
term loans by commercial banks has occurred when the overall size of term
loans has dwindled rather significantly.
Fourth, an overwhelming proportion of term loans have gone in favour
of diversified activities (horticulture, animal husbandry, fisheries and high
tech agriculture and others) and very limited funds have been earmarked for
direct investment in agriculture (minor irrigation, land development and farm
mechanisation). These disbursements for diversified activities also cover RIDF
deposits which are directed towards building rural infrastructures.
Finally, as in the case of
Handbook
data series earlier, attempts made to
measure the associationship between ground-level credit flow and agricultural
GDP, confirms that there is a high positive correlation between the two, and
what is more, when elasticity is measured, we find that there is evidence of
positive and statistically significant output elasticity of GLC flow; a 1 percentage
point increase in credit results in a 0.21% increase in output, as usual on the
cetris paribus
assumption.
8. Inter-Regional Disparities in Total Institutional
Credit Flow (Including Cooperatives)
We have succeeded in procuring special tabulations on state-wise and
region-wise credit flows from NABARD and RBI. These constitute massive sets
of data in respect of all states and regions, some of them for over a decade
and a half from 1994-95 through 2010-11. These cover data on cooperatives,
RRBs and commercial banks, separately and aggregated. We have collated
