Agricultural Credit Growth refers to the increase in the amount of credit (loans, financing, and financial services) provided to the agricultural sector, including farmers, agribusinesses, and rural communities. This growth indicates the rising availability of financial resources for agricultural activities, which could range from planting and irrigation to machinery purchase, livestock farming, and value-added agricultural businesses.
Key Drivers of Agricultural Credit Growth
- Formalization of Rural Credit:
More farmers are turning to formal credit sources (banks, cooperatives) rather than informal sources like moneylenders, which leads to improved access to affordable loans. - Government Initiatives:
The government sets annual credit targets for banks and rural institutions to ensure financial support for farmers. Programs like Kisan Credit Cards (KCC) and subsidized loans contribute to credit growth. - Increased Disbursements:
In FY24, agricultural credit disbursements reached ₹ 25.1 trillion, 25% above the target, showing a positive trend in credit availability. - Digitization:
Digital platforms and land record digitization help streamline loan applications and improve access for farmers, particularly smallholders.
Eligibility for Credit
To access credit, farmers must provide verified records of their agricultural activities and complete KYC (Know Your Customer) procedures. This ensures transparency and reduces fraud.
Importance of Agricultural Credit Growth
- Boosts Productivity:
Access to credit enables farmers to invest in seeds, equipment, and technology, increasing agricultural output. - Financial Inclusion:
It helps reduce dependence on informal credit and promotes financial inclusion, providing better terms and lower interest rates. - Supports Rural Development:
Credit availability supports not only farming but also livestock, fisheries, and agro-processing, boosting rural economies.
