Indian History

Agricultural credit-GDP

1. Credit is an important mediating input for agriculture to improve productivity. Access to institutional credit enables the farmer to enhance productivity by investing in machinery and purchase of variable inputs like fertilizers, quality seeds, and manure and providing funds till the farmer receives payment from sale of produce, which is at times delayed and staggered.

2. The ratio of agricultural credit to agricultural GDP has increased from 10 per cent in 1999-2000 to around 38 per cent by 2012-13 (Figure 5.18). However, the share of long-term credit in agriculture or investment credit has declined from 55 per cent in 200607 to 39 per cent in 2011-12. The decline in the share of long-term credit in agriculture needs to be arrested and reversed.

3. Financial flow in the Agriculture sector has been increased to Rs. 9 lakh crore in 2016-17 from 8.5 lakh crore in 2015-16 to improve the loan reach and accessibility.