Agricultural credit in India

Presented by

Sangeeta kumari (9015)

Student of Food and Agri Business School

OUTLINE
Objective. Indian Agriculture. Indias position in world agriculture. Agricultural resources. Milestone in agriculture development. Evolution of Institutional credit to agriculture. Banking infrastructure. Initiative for financial inclusion. Share of borrowing from different sources.

 Average GDP growth rate of agriculture and other sector. Targets and actual disbursement to agriculture by banks. Conclusion.

OBJECTIVE
1. To study the Impact of Agricultural credit on agriculture production. 2. To study the progress of agricultural credit in India. 3. To study the Impact of Agricultural credit on growth and poverty in India.

Indian Agriculture
Agriculture Sector is changing the socio-economic environments of the population due to liberalization and globalization

About 75% people are living in rural areas and are still dependent on Agriculture. About 43% of Indias geographical area is used for agricultural activity
Agriculture continues to play a major role in Indian Economy

Indian Agriculture
Provides about 65% of the livelihood Accounts for 27% of GDP Contributes 21% of Total Exports, and Supplies Raw materials to Industries Growth Rate in production - 5.7% Food grains production 211.17 mt

Indias position in world Agriculture

Rank

Total Area Irrigated Area Population Economically Active population Total Cereals Wheat Rice Coarse grains Total Pulses Oil Seeds Fruits and Vegetables Implements (Tractors) Milk Live Stock (castles, Buffaloes)

Seventh First Second Second Third Second Second Fourth First Second Second Third First First

Agricultural Resources
Total Geographical Area (TGA) 329 M.H Potential for Biological Production - 265 M.H Net Sown Area (NSA) 143 M.H Net Irrigated Area 56 M.H Area threatened by land degradation - 50% of T GA Drought-prone Area - 190 M.H

Mile Stones in Agricultural Development

Green Revolution (1968) Ever-Green Revolution (1996) Blue Revolution (water, fish) White Revolution (Milk) Yellow Revolution (flower, edible) Bio-Technology Revolution ICT Revolution

Agriculture credit

Evolution of Institutional Credit to Agriculture

1904 1935 1954 Cooperative Societies Act Setting up of RBI Rural Credit Survey Committee

1955 1969 Credit 1970 1975 1981 1982 -

State Bank fo India created for rural penetration

19 Commercial Bank Nationalised, All India Rural Review Committee Lead Bank Scheme - States/Districts Regional Rural Bank - Hybrid banks 6 more Commercial Banks nationalised Setting up of NABARD

1992 2001 Tatkal 2006

SHG - Bank Linkage Programme

Kisan Credit Card/Swarojgar Credit Card/Gramin Card Committee on Financial Inclusion Set up

BANKING INFRASTRUCTURE
NABARD

RBI
RRBs (135)

ST Coop

LT Coop

Commercial Banks 105

SCBs (30)

SCARDBs (20)

14,501 Branches (rural)

DCCBs (367)

PCARDBs 768

33411 Branches semi-urban and rural

PACs 1,05,000

Initiative for Financial Inclusion

A. SHG - Bank Linkage Programme - 2.2 million SHGs with loans outstanding of Rs.11397.50 million (average size of SHG - 15 members and 90% women SHGs)

B.
C. i. ii. iii.

MFI - Bank Linkage

Women Entrepreneurs Development Enterprises) with NGO assistance Credit - marketing related Rural Entreprenurship programme with the help of Banks and NGOs (25% women) Area Development Programmes in clusters - skills upgradation and capacity building Programmes (Micro

D. Farmers Clubs 18,000 with the help of banks for technological transfer, banking promotion schemes
E. Joint Liability Groups of Farmers (850 JLGs with Rs. 124 million finance) (4-10 farmers)

Initiative for Financial Inclusion

F. quick credit to farmers 59.1 million cards

G. Swarojgar Credit Cards - for unorganised poor people both rural and urban H. Gramin Tatkal Card - project for loans upto Rs.50,000 without collateral for families credit needs. (pilot schemes launched) I. Business correspondent and faciliators (January 2006 to enhance rural outreach J. SGSY Scheme for poverty alleviation (restructuring various credit programmes like IRDP, TRYSEM , DWACRA etc.) Cluster Development Programme (for Credit intensification) with shared infrastructure, markets, services, common opportunities and threats (101 already started)

Share of borrowing from different sources

Source credit Non-institutional 1951 92.7 1961 81.3 1971 68.3 1981 36.8 1991 30.6 2002 38.9

Money lenders institutional

69.7 7.3

49.2 18.7

36.1 31.7

16.1 63.2

17.5 66.3

26.7 61.1

Co-operative
societies/banks Commercial banks

3.3

2.6

22.0

29.8

23.6

30.2

0.9

0.6

2.4

28.8

35.2

26.3

unspecified
total

100.0

100.0

100.0

100.0

3.1
100.0

100.0

Average GDP growth rates of agriculture and other sectors at 1999-2000 prices (percent) period Pre-Green Revolution Green Revolution period Wider technology dissemination period Early Reform Period Ninth and Tenth Plan 1951-52 to 1967-68 1968-69 to 1980-81 1981-821990-91 Total Agriculture Economy & allied 3.7 3.5 2.5 2.4 Crops & livestock 2.7 2.7 Nonagriculture 4.9 4.4

5.4

3.5

3.7

6.4

1991-92 to 1996-97 1997-98 to 2006-07 2005-06 to 2006-07

5.7 6.6 9.5

3.7 2.5 4.8

3.7 2.5 5.0

6.6 7.9 10.7

Targets and actual disbursement to agriculture by banks

(Rs.crore) (2004-05) Agenc y Comm. Banks Coop. Banks Target 57,000 39,000 Disburs ement 81,481 31,231 (2005-06) Target Disburs ement (2006-07) Target Disburs ement (2007-08)* Target Disbur sement

87,200 1,25,477 1,19,000 16,64,486 1,50,000 1,56,850 38,600 39,786 41,000 42,480 52,000

43,684

RRBs
Other Agencie s Total

8,500

12,404
193

15,200

15,223

15,000

20,435

23,000

24,814

1,05,000 1,25,309 1,41,000 1,80,486 1,75,000 2,29,401 2,25,000 2,25,348

CONCLUSION
Over the years there has been a significant increase in the access of rural cultivators to institutional credit and the role of informal agencies, including moneylenders, as a source of credit has declined. Agriculture credit amount has a positive and statistically significant impact on agriculture output. Though there are several gaps in the present institutional credit delivery system, agriculture credit is still playing a critical role in supporting agriculture production in India.