Impact of Agricultural Finance on Indian Economy Essay Sample

July 27, 2017 General Studies

Agricultural finance by and large means analyzing. analyzing and analysing the fiscal facets refering to farm concern. as a nucleus sector. Agriculture plays a important function in the development of the Indian economic system. The importance of farm recognition as a critical input to agribusiness is reinforced by the alone function of Indian agribusiness in the macro-economic model and its function in poorness relief.

Recognition is an of import determiner of value add-on in agribusiness. A speedy appraisal by the Reserve Bank of India. the relationship between institutional recognition to agriculture ( from commercial Bankss. co-ops and RRBs ) has shown grounds of positive and statistically important snap. that is yearly every 1 per cent addition in existent agricultural recognition consequences in an addition in existent agricultural GDP by 0. 22 per cent.

Manners of agricultural finance- Direct Finance Ex ; harvest loans Finance to single Farmers [ including Self Help Groups ( SHGs ) or Joint Liability Groups ( JLGs ) . i. e. groups of single husbandmans ] for Agriculture and Allied Activities. Indirect Finance Ex ; Loans to Non-Banking Financial Companies ( NBFCs ) for on loaning to single husbandmans. ( I ) Recognition for purchase and distribution of fertilisers. pesticides. seeds. etc. ( two ) Loans up to Rs. 40 hundred thousand granted for purchase and distribution of inputs for the allied activities such as cowss feed. domestic fowl provender. Finance for puting up of Agri-clinics and Agribusiness Centers. Classification of recognition: Based on the repayment period of the loan. It is Sub-divided in to 3 types- Short–term loans. Medium – term loans. Long – term loans. Beginnings of agricultural recognition constitute: Non-Institutional beginnings ( Moneylenders. Traders ) . Institutionalsources ( Co-operatives. CB’s. RRB’s etc ) .

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Co-operative Bankss were promising institutional bureaus supplying finance to agribusiness sector. Subsequently after nationalisation. it was made mandatary for the commercial Bankss lower limit of 40 % of the entire bank recognition finance to agriculture as a precedence sector. RRB’s are playing an of import function as rural loaning establishment & A ; supplying recognition to weaker subdivision of society. Banks to supply finance to agriculture as a precedence sector. There has been increase in the strength of agribusiness recognition in the last 40 old ages. as measured by the ratio of agricultural recognition to agricultural GDP. The recognition strength increased from 12 per cent in the early 1970s to 67 per cent by 2010-11.

A faster growing in Indirect recognition to Agriculture since the 2nd half of the 1990s. was observed & amp ; faster than direct recognition. The portion of indirect recognition in entire agricultural recognition supplied by commercial Bankss measured from about 11 per cent in 1995 to 29 per cent by 2011.

Role of Microfinance-Microfinance means supplying really hapless households with really little loans ( micro recognition ) to assist them prosecute in productive activities or turn their bantam concerns. The term ‘micro’ literally means ‘small’ . But RBIs Micro Credit Special Cell says borrowers accounts up to the bound of Rs. 25. 000 could be leveled as micro recognition merchandises and this sum could be bit by bit increased up to Rs. 40. 000 over a period of clip.

Micro-financing through Self Help Groups ( SHGs ) has assumed the prominence in recent old ages. As on 31 March 2009. there were more than 61. 21 lakh savings-linked SHGs and more than 42. 24 lakh credit-linked SHGs therefore. covering about 8. 6 crore hapless households the SHG’s play a polar function in constructing entrepreneurship and employment among the rural mass. Impact of Rural recognition Card Schemes-Kisan Credit Card strategy ( KCCS ) . Impact of recognition on Sericulture. Impact of recognition on Poultry development. Impact of recognition on harvest outputs. Case Study: K. V. Bhavya and K. B. UMESH Stree Shakti Groups ( SSGs ) are new inventions in the field of rural economic development. to finance the rural adult females and besides to fulfill their recognition demands. This survey chiefly focused on the impact of micro-finance on the development of SSG members. The survey was undertaken in Doddaballapura taluk of Bangalore rural territory in Karnataka. The survey besides revealed that the public presentation of SSG’S promoted by Non Governmental Organizations ( NGO ) was much better than Government promoted SSGs. Hence. more figure of NGOs must be involved in advancing SSGs covering more adult females common people.


Dr. T. V. Ramana Performance of rural recognition Schemes in India. A Review. Kurkshetra. vol 59 ( 8 ) :14-17.

Handbook of Statistics on Indian Economy. RBI ( 2010-11 )

Dr. T. V. Ramana Performance of rural recognition Schemes in India. A Review. Kurkshetra. vol 59 ( 8 ) :14

Handbook of Statistics on Indian Economy. RBI ( 2010-11 )

K. V. Bhavya And K. B. Umesh Impact Of Micro-Finance On The Development Of Stree Shakti Group Members Bangladesh J. Agril. Res. 36 ( 2 ) : 333-350. June 2011.

“Report on Trend and Progress of Banking in India” . assorted issues.

Report of the Advisory Committee on Flow of Credit to Agriculture and Related Activities from the Banking System

Tax returns on Sectoral Deployment of Bank Credit. Database on Indian Economy. RBI.

The study of Agricultural Credit – Accomplishments and Challenges- Duvvuri


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