AGRICULTURAL CREDIT GROWTH AND INDEBTEDNESS OF FARMERS IN INDIA
In the period after bank nationalisation in India, this country witnessed a large scale expansion of bank credit to agriculture along with the spread of bank branches to the rural areas.Researchers also found its positive impact in reducing rural poverty and increase inemployment. This was the period when indebtedness among cultivators declined sharply with rising availability of agricultural credit in rural areas. The indebtedness amongst cultivators started increasing from the beginning of 1990s and the All India Debt Investment Survey in 2013 found that incidence of indebtedness among the rural cultivators had almost reached the level of pre bank nationalisation period of 1960s. The share of credit that the cultivators are forced to take from non-institutional sources has still remained as high as 36 per cent. The money lenders have reinstated themselves in rural areas in the post liberalisation period. This is vindicated with their share of credit to cultivators increasing from 17.2 per cent in 1991 to as high as 26.8 per cent in 2002. This situation has not changed for a decade in spite of a robust agricultural credit growth since 2004. Share of credit to farmers from money lenders has actually increased to 29.6 per cent in 2013. The money lenders’ hand has been strengthened in the rural areas mainly due to the apathy of the public sector banks to disburse the small ticket credit to small and marginal peasants.