Resource centre on India's rural distress

In agri-credit, small farmers are still outside the fence -AS Mittal

-The Hindu

The agriculture sector’s performance has not been commensurate with the increasing subsidised credit it receives

Farmers on the warpath would mean that agriculture reforms have again occupied centrestage not just in the minds of the politicians but also policymakers. To enable small farmers to diversify their crops or improve their income they must have access to credit at reasonable rates of interest. This has been an agenda of the triad of the Centre, the States and the Reserve Bank of India (RBI) for decades. Unfortunately, while the volume of credit has improved over the decades, its quality and impact on agriculture has only deteriorated. Agricultural credit has become less efficient in delivering agricultural growth. Otherwise, why should over 85% of farmers’ income remain stagnant over the years? Any other sector which has access to a low rate of interest credit has always boomed and ballooned so much so it has created a bubble of its own.

Every year, the central government announces an increase in the target of subsidised agriculture credit limit and banks surpass the target. On February 1, Budget day, the Union Finance Minister will again set a new agricultural credit target for 2021-22. In 2011-12, the target was 4.75-lakh crore; now, agri-credit has reached the target of 15-lakh crore in 2020-21 with an allocated subsidy of 21,175 crore. The question is: where is the credit and subsidy going and are they really benefiting the farmers?

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