3
Chapter 5 uses data from another source, namely, NABARD, which
provides ground-level flow figures of farm credit and its different dimensions.
An attempt has been made here to analyse the changing roles of co-operatives
vis-à-vis commercial banks, in the aggregate and separately in crop loans and
term loans. Apart from examining the nature of inter-regional disparities that
exist in total institutional credit flow for agriculture and allied activities, the
chapter dilates a while on the extent of ground-level assistance that is rendered
by banks for diversified activities as well as for rural non-farm sectors. These
GLC data also have been subjected to an analysis of credit intensity and
production elasticity of credit results.
Chapter 6 is an unusual one, a first of its kind, in an agricultural credit
study. It takes a critical look at the evolution of, and progress made in, Rural
Infrastructure Development Fund (RIDF), which has grown to a vast amount
because banks have failed to fulfil their obligations under the priority sector
target for agricultural credit persistently over years. The chapter makes an
attempt to bring out the extent to which the public has no knowledge of the
various ramifications of the annual allotment made for the Fund. The chapter
brings out how a substantial amount of funds remain with the banking system
beyond the allotted sums because of repeated defaults in priority sector credit
target.
In terms of focus on new instruments of farm credit, Kisan Credit Card
has become an important and live issue. After presenting an extensive set of
data on the numbers and amounts of credit under the KCC – all-India and
state-wise, the chapter quotes a good set of field study results and brings out
suggestions for improving the scheme for making it farmer friendly. The chapter
concludes that KCC is not a card
per se
; it is a pass book. Amongst many
reforms suggested, an important one is that steps must be taken to convert
KCC into a regular credit card or a biometric card, with all its precautions.
In almost all discourses on farm credit, the focus has been on supply-
side issues of public policies, but there cannot be any denial that the behaviour
of the banking industry cannot be explained by supply-side factors alone. With
the banking industry rightly being risk averse as it is the custodian of public
deposits, demand-side factors, including the absorptive capacity and repaying
abilities of borrowers, play a crucial role in credit delivery. In recent years,
the banking industry has been faced with significant structural changes in the
economy with the share of agriculture in the country’s GDP receding rather
very sharply. When GLC data on crop loans and term loans are related to
