53
The above patterns of expansion in agricultural credit appear more
distinct in constant price credit series. As shown in Table 4.2, the real numbers
of agricultural credit grew at an average rate of 19.2% per annumbetweenMarch
1973 and March 1981 (capturing statistical benefits of low base) and at a rate
of 7.7% per annum during the whole of the 1980s. The average increase during
the first two decades after bank nationalisation in nominal terms worked out
to over 22% per annum or at 13.0% per annum in real terms which indeed had
been very impressive. As explained later, there were nearly 20-fold increases in
agricultural loan accounts during the period.
The reform period of the 1990s saw a steep decline in the growth of
agriculture credit to 10.9% per annum in nominal terms and to 2.3% per
annum in real terms. Following social pressures and a series of consequential
policy initiatives, the early part of the current 21 century saw reversal of the
trend with the farm credit growth accelerating to a high of 28.2% per annum in
nominal terms and at 22.5% in real terms. This was short-lived and prevailed
only for about five to six years, that is up to 2006-07; thereafter there has been
a reaction to high growth and the credit growth fell to 19.1% per annum in
nominal
terms and to 7.0% per annum in
real
terms. This has been the period
when terms of trade moved in favour of agriculture, which is reflected in the
vastly differential variations in overall GDP and agricultural GDP deflators.
While agricultural deflator has increased by 79% between 2004-05 and 2010-
11, overall GDP has risen by 46.5% during the same period. As a result, the
real agricultural credit based on agricultural GDP deflators shows that the
average increase during the latest four-year period turns out to be low at 7%
per annum in contrast to an average increase of 11% per annum based on
overall GDP deflator.
Table 4.2: Average Annual Growth Rates in Agricultural Credit of Scheduled
Commercial Banks During Certain Distinct Phases
(In Percentages Per Annum)
Credit Series
Mar-73
to
Mar-81
Mar-81
to
Mar-91
Mar-91
to
Mar-01
Mar-01
to
Mar-11
Mar-01
to
Mar-07
Mar-07
to
Mar-11
Nominal Agricultural Credit
28.4 16.9 10.9 24.7 28.2 19.1
Real Agricultural Credit
(a) Deflated by Deflators of Overall GDP at
Market Prices
17.9
7.6
2.7 18.1 22.8 11.1
(b) Deflated by Agricultural GDP Deflators
19.2
7.7
2.3 16.3 22.5 7.0
Note:
Periodisation has been done not by any statistical method of discerning structural breaks but by
visual observations and by a more potent indicator, namely, the peaks and troughs of the number of
agricultural borrowers as noted in a subsequent section.
Source:
RBI (2011),
Banking Statistics: Basic Statistical Returns of Scheduled Commercial Banks in
India, March 2011
(Vol. 40), various issues.
