Advances-Agriculture :
Indian Agriculture has always been the backbone of Indian economy despite sustained progress in industrial and service(s) sector. It still contributes
around 18 % of the national income and provides employment opportunities to around 50% of the population. Indian agriculture has been source of raw materials to many of our leading industries like cotton, jute textile industries, sugar, flour mills, vanaspati, oil mills etc. Besides, many industries like handloom weaving, rice-dehusking etc. depend indirectly on the agriculture. Rapid growth in agriculture is essential not only for self-reliance but also to earn valuable foreign exchange.
The agriculture sector in India is pre-dominantly dependent on Monsoon rains which more often than not tend to be of erratic nature. Hence, agricultural credit is considered as one of the most basic input for conducting all agricultural development programmes. In India there is an immense need for proper agricultural credit as the economic condition of Indian farmers generally is of subsistence. From the very beginning the prime source of agricultural credit in India has been money lenders as many of the commercial banks were generally discouraged by inherent characteristics of Indian agriculture like uncertain character of Indian agriculture, small amounts of individual loans, inadequate security for loans, difficulty in recovery of loans from farmers and lack of business experience of working with rural sector.
With a view to ensure wider spread of agricultural credit, the Government adopted the institutional credit approach through various agencies like co-operatives, commercial banks, regional rural banks etc. to provide adequate credit to farmers, at a cheaper rate of interest. The long term and short
term credit needs of these institutions are also being met by National Bank for Agricultural and Rural Development (NABARD). It is the evolution of agricultural finance. It has the objective of promoting the health and the strength of the credit institutions which are in the forefront of the delivery system namely, cooperatives, commercial banks and regional rural bank. It is, in brief, an institution for the purpose of refinance; with the complementary work of directing, inspecting and supervising the credit- flows for agricultural and rural development.
The evolution of institutional credit to agriculture could be broadly classified into four distinct phases –
i. 1904-1969 (predominance of co-operatives and setting up of RBI);
ii. 1969-1975 [nationalization of commercial banks and setting up of Regional Rural Banks (RRBs)],
iii. 1975 – 1990 (setting up of NABARD) and;
iv. From 1991 onwards (financial sector reforms): The genesis of institutional involvement in the sphere of agricultural credit could be traced back to the enactment of the Cooperative Societies Act in 1904. The establishment of the RBI in 1935 reinforced the process of institutional development for
agricultural credit.
Government has increasingly begun to tap institutional finance from banks and other term lending institutions for financing various developmental
programmes in the State in view of the need to supplement plan financing. Banks in the State have also played a pivotal role in this regard. However, credit should be utilized in prudent manner to maximize returns and spread the benefit over wider sections of the population. Successful implementation of socioeconomic developmental programmes calls for effective co-ordination between financial agencies and government departments. It also helps in improvising efficiency of resource allocation & identifying infrastructural gaps.
The State Level Bankers’ Committee (‘SLBC’), constituted by the Reserve Bank of India under the Lead Bank Scheme periodically takes up the
review performance and monitors progress under special schemes. At the district level the District Consultative Committee with the Chief Executive Officer of Zilla Panchayat as chairperson and representatives of financial institutions and Heads of Government departments at the district level as members’ monitors the implementation of government sponsored schemes & Service Area Credit Plans. At the block level, Block Level Bankers’ Committee chaired by Lead District Manager with bank managers and departmental heads of government at block level as members periodically reviews the implementation of government sponsored schemes & Service Area Credit Plans and sorts out problems encountered in the implementation of various programmes. In order to select & prioritise the works for loan assistance from National Bank for Agriculture and Rural Development (NABARD) under Rural Infrastructure Development Fund (RIDF) Scheme, launched in 1995-96, a Cabinet Sub-Committee on RIDF has
been constituted under the chairmanship of the Minister for Public Works. There is also a High Power Committee chaired by the Additional Chief Secretary and Development Commissioner for reviewing the implementation of RIDF projects. These policy measures have resulted in the increase in the share of institutional credit of the rural households.