AGRICULTURE FINANCE IN INDIA
Agriculture finance is a critical component of the agricultural sector in India, providing the necessary capital for various agricultural activities, including crop production, livestock rearing, and agribusiness. Adequate and timely access to finance is essential for farmers to invest in modern inputs, adopt advanced technologies, and improve productivity. In a country where agriculture employs nearly 58% of the population and contributes around 17% to the GDP, effective agricultural finance mechanisms are crucial for the sector's growth and sustainability.
The agriculture finance landscape in India comprises various sources of funding, including formal financial institutions such as banks and cooperatives, as well as informal sources like moneylenders and traders. Over the years, the Indian government has introduced several schemes and policies to enhance the accessibility and affordability of agricultural finance. Despite these efforts, challenges such as inadequate credit flow to small and marginal farmers, high dependency on informal credit, and issues related to repayment and defaults persist.
Agricultural finance in India is crucial for farmers to manage the costs associated with cultivation, harvesting, storage, and marketing of their produce. The sources of agricultural finance in India can be broadly categorized into non-institutional and institutional credit. Each of these sources plays a significant role in meeting the diverse financial needs of the agricultural sector.
Non-institutional credit sources refer to informal channels that provide financial assistance to farmers. These sources are often more accessible, especially in rural areas, but they come with higher interest rates and greater risks
1.Moneylenders
i.Accessibility: Moneylenders are easily accessible and provide quick loans without the need for extensive documentation. They are a significant source of credit for small and marginal farmers who may not have access to formal banking services. According to the National Sample Survey Office (NSSO), around 30% of rural households still rely on moneylenders for credit.