2
to off-farm and non-farm activities as well as for inclusion under the National
Rural Livelihood Mission (NRLM) and vocational training at Rural Self-
Employment Training Institutes (RSETIs) set up by the Lead Banks in each
district. Chapter 3 brings out how public authorities have always emphasized
historically the importance of rural institutional finance and how varied policy
thrusts facilitated unprecedented expansion during the 1970s and 1980s after
bank nationalisation and how banking infirmities of the 1990s have made the
banks falter on their traditional developmental role. Recent progress has been
a mixed one. Emphasis in the chapter has been in narrating a long list of 13
steps that the farm credit policy contours have passed through.
The next two chapters (Chapters 4 and 5) form the core part of the
study presenting the substantive empirical basis for many themes advanced
in it. This quantitative dimension of banking progress begins in Chapter 4
which attempts a report card on the performance of scheduled commercial
banks that constitute the largest segment of the banking system and that which
face a number of policy targets and guidelines. Apart from aggregate trends,
comprehensive reviews have been presented of different dimensions of inter-
regional, inter-state, and inter-district aswell as inter-classdisparities inbanking
development. In all respects, the chapter sets out the theme of four phases in
bank credit delivery: high levels of increases during the 1970s and 1980s after
bank nationalisation; distinct slowdown of the 1990s; forced expansion after
signs of social revulsion in 2004-05 and thereafter; and some pause in the
latest period as a reaction to the large forced increases. This is followed by a
caricature description of the possible causes that have brought about the given
phases. The chapter has many other themes too: credit distribution by land
size and by size of loans; priority sector targets, their nebulous character and
distorted achievements; loan waiver and interest subvention schemes; doubling
of farm credit and its quality; neglect of small borrowers, etc. The chapter has
also presented extensive results of credit intensity (farm credit to agricultural
GDP ratios), as also the result of production elasticity of farm credit.
In terms of data analysis, the subject of the above chapter concerning the
progress of scheduled commercial banks has been a neat and straightforward
one, particularly because of the consistent data series available by and large
from one source, namely, the RBI’s
Basic Statistical Returns
(BSR). But, when
we compare agricultural credit data from different sources, there arise serious
and inexplicable differences. There is also considerable mix-up between direct
agricultural credit and indirect credit. Therefore, Chapter 4 brings out a series
of data differences on agricultural credit so that the authorities may take note
of them and rectify them to the extent possible.
