Agriculture Credit in India: Issues and Challenges

Abstract

India is essentially a “Rural Nation” as per the information provided by the Union home minister and minister of cooperation around 65% of Indian population still depends heavily on agriculture and allied activities. However, it is essentially imperative to ensure the flow of credit for agriculture and non agricultural purposes, savings, insurance and money transfers. To achieve this objective of agricultural credit, the stand of policy towards rural credit was to ensure provision of sufficient and timely credit at reasonable rates of interest to a large segment of the rural population. The strategy devised for the purpose rested on three pillars: Expansion of the institutional structure, Direct lending to disadvantaged borrowers and lower interest rates. The chosen institutional vehicles for the task were cooperatives, commercial banks and Regional Rural Banks [RRB’s] and NABARD. Agriculture credit is considered as one of the basic inputs for executing all agricultural development programmes. In India there is a necessity for proper channelization of agricultural credit so that the farmers have easy access to these credit schemes. This paper primarily deals with the flow of credit in the agricultural sector, and different schemes and initiatives available for farmers in India. Keywords: Agricultural Credit, Credit policy, Agriculture development.