Rural indebtedness and dependence on private moneylenders is an age-old problem in India. For
more than 100 years now, the Central Government and the Reserve Bank of India have been
making efforts to enhance institutional credit in rural areas particularly to assist in agricultural
operations. It began with the enactment of the Co-operative Credit Societies Act (1904) but
efforts were redoubled after the nationalisation of Scheduled Commercial Banks in 1969. The
aim of this paper is to evaluate the measures taken over the years and assess the extent to which
they have been successful. It attempts to answer the question, “Is the agenda of expansion of
institutional finance to agriculture unfinished?” The findings in the paper are inconclusive on
this issue on account of contradictions in evidence: while the 2013 AIDIS survey finds that noninstitutional lenders still account for only 36 per cent of the total outstanding agricultural loan,
the short-term credit from institutional sources in 2012-13 covered 100 per cent of the input cost
in agriculture in that year according to the National Accounts Statistics.
A particular focus of the paper is analysis of the cost and benefits of subsidies for agricultural
credit and generalised debt waivers.
It finds that the steps taken to enhance institutional credit such as the opening of a large number
of rural branches of commercial banks, priority sector lending with 18 per cent target for
agriculture, Kisan Credit Cards and the financial inclusion initiative have really been
instrumental in the impressive rise in agricultural credit and not credit subsidies. At the same
time, the sharp rise in the share of short-term credit in the proportion of input costs points
towards diversion of subsidised credit for non-agricultural purposes. The paper, therefore, makes
a strong case for a serious review of the policy on agricultural credit subsidies. On generalised
debt waivers, the finding is that they create expectations of similar waivers in future and
disincentivise farmers from repaying loans. At the same time, anticipating adverse borrower
behaviour, lenders tend to reduce the size of their lending operations; the net result is a
contraction of credit available to farmers. The paper, therefore, also argues strongly against
generalised waivers in future. However, targeted action where waivers follow a case by case
examination of the merits of the case can be an appropriate response, particularly if such action
is part of a comprehensive package to address acute agricultural distress.
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2016 Credit policy for agriculture in India- An evaluation. Supporting Indian farmers the smart way, rationalising subsidies and investments
Credit policy for agriculture in India: An evaluation. Supporting Indian farms the smart way. Rationalising subsidies and investments for faster, inclusive and sustainable growth
Integrated Assessment of Scale Impacts of Watershed Intervention
Key Features
- Integrates hydrogeology, bio-physical, and socioeconomic aspects of watersheds in a hydrological context
- Provides a comprehensive understanding of the impacts of watershed interventions
- Assesses the role of watershed interventions in enhancing household resilience
- Provides hydrological and socio-economic methodologies for design of sustainble watershed interventions including scale and institutional arrangements for implementing and sustaining watershed interventions
The Dragon and The Elephant: A Comparative Study of Agricultural and Rural Reforms in China and India
“During the past two-and-a-half decades, China and India have implemented a series of economic reforms that have led to recent growth rates of 9-11 percent per year in China and 8-9 percent per year in India. The rapid economic growth of the two countries has not only captured the attention of the world but has also set into motion a rethinking of the very paradigm of economic development because, despite similar trends in growth rates, the two countries have taken different reform paths, which have led to different rates of poverty reduction. Thus far, agriculture-led growth in China has reduced poverty much faster than has India’s experience of liberalizing and reforming the manufacturing sector. With public investments in rural roads and agricultural research and development (R&D) playing critical roles, China has been able to not only feed its population but also raise rural incomes despite having much smaller average landholding size than in India. Nonetheless, there are also lessons to be learned from India’s experience. This brief is based on a book, The Dragon and the Elephant: Agricultural and Rural Reforms in China and India (published for IFPRI by Johns Hopkins University Press and, in South Asia, by Oxford University Press-India), which compares the rural development and agricultural reform experiences of China and India and examines the lessons that can be learned from both.”
Book published by IFPRI
2007 The Dragon and The Elephant A Comparative Study of Agricultural and Rural Reforms in China and India
Paper published in EPW
2008 The Dragon and The Elephant A Comparative Study of Agricultural and Rural Reforms in China and India