Discuss the types and sources of agricultural credit in India. Explain the initiatives taken by the Indian…

Question

Discuss the types and sources of agricultural credit in India. Explain the initiatives taken by the Indian Government in order to improve access to agricultural credit.

Ghissu Editorial · Accepted Answer

Agricultural credit in India includes short-term crop loans, medium and long-term investment loans, group-based JLG credit and loans for allied activities, sourced mainly from banks, RRBs and cooperatives, though moneylenders still serve about 23% of farmers. Government initiatives include KCC, priority sector lending, interest subvention and the Agriculture Infrastructure Fund.

**Introduction**

Agricultural credit supports India’s small and marginal farmers, who form the backbone of the agrarian economy but face challenges like weather risks and informal lending. Timely and affordable credit is essential for investing in quality inputs and technology, which boosts productivity and resilience.

**Types and Sources of Agricultural Credit**

SKETCH: tree | Types of Agricultural Credit  
- Short-term Credit  
  - Crop Loans (KCC)  
- Medium & Long-term Credit  
  - Asset Creation Loans  
- Collateral-free Credit  
  - Joint Liability Groups  
- Allied Sector Credit  
  - Fisheries & Animal Husbandry

1. **Short-term and Long-term Credit**: The Kisan Credit Card⟦1⟧ (KCC) scheme⟦2⟧ offers short-term crop loans (collateral-free up to ₹2 lakh, within a limit of ₹5 lakh); bank term loans, refinanced by NABARD, fund asset creation. These loans cover seasonal needs and capital investments like irrigation and machinery.

3. **Institutional and Non-institutional Sources**: Institutional credit from commercial banks, RRBs, and cooperatives disbursed over ₹22.8 lakh crore in 2023-24; informal sources still serve 23% of farmers, often at high interest rates. Digital platforms and Pradhan Mantri Jan Dhan Yojana⟦4⟧⟦3⟧ enhance inclusion by linking savings accounts to credit access.

**Government Initiatives**

5. **Kisan Credit Card and Priority Sector Lending**: KCC has over 7.75 crore accounts with ₹9.8 lakh crore loans outstanding; RBI mandates an 18% agriculture sub-target within the 40% Priority Sector Lending target on adjusted net bank credit, ensuring steady institutional credit flow.

6. **Interest Subvention and Infrastructure Support**: Interest subsidies reduce borrowing costs on short-term crop loans; the ₹1 lakh crore Agriculture Infrastructure Fund⟦5⟧ aids post-harvest facilities, with significant uptake in ==Andhra Pradesh⟦6⟧==, reducing wastage and improving market access.

**Conclusion**

Targeted government schemes and institutional reforms have expanded credit access, crucial for enhancing agricultural productivity and farmer welfare. Continued innovation and inclusion efforts remain vital for sustainable agrarian growth.

Discuss the types and sources of agricultural credit in India. Explain the initiatives taken by the Indian Government in order to improve access to agricultural credit.

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