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Importance Of Agricultural Credit

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A Study on Institutional Credit to Agriculture in India *T.THAMIZHVANAN **B.REVATHI
Introduction
Credit is one of the crocial inputs for agricultural development. It capitalizes farmers to undertake new investments or adopt new technologies. The importance of agricultural credit is reinforced by the unique role of indian agriculture in the macroeconomic framework along with significant role in poverty alleviation. The emphasis on the institutional framework for agricultural …show more content…

It is mainly attributed to the high growth witnessed by the non-agricultural sector in recent years. The share of agriculture in national income has also declined. The correct yardstick to look at the progress of agricultural credit is evaluation of agriculture as a proportion of AGGDP and trends in real agricultural credit in terms of per unit gross cropped area. The performance of agricultural credit in terms of these indicators seems to be noteworthy. Interestingly, the share of agricultural credit as a proportion of AGGDP has in been rising continuously since 1970. it was only about 5 per cent in TE 1972-73, which rose to about 8 d per cent in TE 1981-82 and made a quantum jump in recent years and rose to 31 per cent in TE 2008-09.GDP in TE 2008-09. the agricultural credit per hectare of gross cropped area has shown an increasing trend with a tremendous rise in recent years. It has increased from Rs 375 in TE 1972-73 to Rs 5651 in TE 2008-09. About fifteen-fold increment has been registered in agricultural credit in real terms during te period 1970-2008. These indicators suggest that the agricultural credit system is geared to the agricultural growth and the availability of credit to the rural cultivators has increased …show more content…

It plays a significant role in ensuring a sustainable agricultural growth. But, the share of investment credit in total agricultural credit has been declining continuously and it is pervasive across all institutional sources of agricultural credit. The share of investment credit has decelerated from 18 per cent in 1991-92 to per cent in TE 2001-02 and further to 6 per cent in TE 2005-06 (Table 4). it is not favorable to accelerating agricultural growth. A balance between short-term operational credit and long – term investment credit has to be maintained to ensure sustainable agricultural growth. The declining share of investment credit indicates that farmers seem to borrow more short-term credit in order to meet their input needs to maintain continuity in agricultural operation and do not pay adequate attention to the long-term capital formation for

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