1
I
Introduction
With its deep involvement in agricultural and rural development,
NABARD thought it necessary, it appears, to take a close look at the evolving
role of agricultural credit and its various ramifications for farm growth. EPW
Research Foundation (EPWRF) had done a study on the same theme some
six-seven years ago on behalf of the Indian Institute of Banking and Finance.
NABARD has, therefore, assigned EPWRF to take a fresh look at the subject
and submit a detailed report to them. Since the earlier study in 2007-08, there
have been significant changes in the policy contours concerning the rural credit
architecture and the trends in credit delivery for agriculture, and hence the
accompanying report is an entirely revised version of the earlier volume.
The study thus makes a systematic analysis of the evolution, trends and
composition of institutional credit extended to the agricultural sector in India
and the nature of inter-size, inter-regional, inter-state and intra-state disparities
prevailing in the distribution of farm credit. The subject of the study remains a
live one, considering the enormous amount of intellectual discourses, enquiry
committee reports and public policy initiatives that have been going on now for
many years. We have sought to cover all of them against the backdrop of the
performance of banks in aggregate credit delivery and its distributive goals.
The study is essentially a quantitative exercise, though it does strive to perceive
the importance of various policy stances and banks’ response to them. One
important focus bestowed in the study concerns the spread of rural credit
institutions in different regions on the premise that the success or otherwise
of farm credit delivery is almost entirely dependent upon the presence or
otherwise of the rural credit architecture. This has also been studied against
the backdrop of the highly focussed public policy goal of “financial inclusion”.
The study is presented in 12 Chapters including the present one.
Hereafter the study begins with two introductory chapters in the form
of an essential background to the study. The next chapter, Chapter 2, makes a
brief attempt at enumerating the kind of challenges that the agricultural sector
in India has been facing at an all-India as well as at states level. Explaining
that the agricultural sector has been facing crisis in twin dimensions of an
agrarian crisis and an agricultural developmental crisis, the section brings
out how reduced growth and growing marginalisation have impinged on credit
delivery by banks as demand-side constraints. This chapter singles out the
importance of focusing on marginal farmers as a separate category, even as
compared with small farmers, as candidates for diversification and migration
