Agriculture Credit in India: An Integrated Rural Credit Approach

This paper is aimed at strengthening policy reforms in the area of agriculture credit delivery system for the sustainability of agriculture for food security and rural development. In India strengthening of agriculture is important for elimination of rural poverty, food insecurity, unemployment and sustainability of natural resources. But till today strengthening of agriculture was meant to be increasing productivity by introduction of high yielding seeds, application of chemical fertilizers and pesticides, mechanization and making availability of institutionalized credit for purchasing the preceding inputs, as result the Indian agriculture has become commercialized but not profitable to the producer. This commercialization has attracted more number of middle men making the marketing channels inefficient by delivering the produce at inflated prices to the consumer and negligible margin to the producer making him indebt. This is discouraging the farmer to move towards capital intensive commercialized agriculture practices which only can serve the future food requirements of the country. This has assumed added importance to integrate efficient marketing and rural credit systems. The time has come to redefine agriculture as the integrated activities relating to production, processing, marketing, distribution, utilization and delivered at each level individually. Agricultural credit development strategy till today was addressing institutionalization of credit at farmers‟ level in marketing, trade, processing and agribusiness. As a result of efforts in the agriculture credit delivery system, the share of private money lenders (non institutional credit) has decreased substantially from 93 percent in early 1950‟s to 31 per cent by 1991. But showing their presence as an important and most attracted source of credit by increasing there share to 39 percent by 2002. One main reason for this is they have been always integral part of rural supply chain for inputs and marketing channels. The All India Rural Credit Survey (1954) has quoted that agriculture credit in India fell short of the right quantity , was not of the right type, did not serve the right purpose and often failed to go to the right people, even today this spells right rural credit with infrastructural requirements for production (input) , processing, marketing , distribution, utilization , trade with value added service like technology transfer at single point to form the rural credit hubs or virtual integration by utilization of the information technology create new Indian sustainable agriculture for food security.