Mumbai: The flow of agricultural credit may have increased from ?96,000 crore in 2004 to ?10 lakh crore now; about 18,000 new rural branches have been set up and yet there is an agrarian crisis because of definitional dilusions as well as diversion of funds from the needy small farmers, Professor Ramakumaar, Agro Economist, Tata Insitute of Social Sciences (TISS), said on Monday. He was speaking at the AIBEA’s National Banking Conclave.
He pointed out that one fourth of the direct agriculture finance given to farmers in India is through Urban/metro branches. The figures are even more striking in the case of West Bengal where 55 per cent of direct agricultural finance is done through Urban and Metro branches, largely in Kolkata, he said. This was followed by Maharashtra (37 per cent) and Tamil Nadu (32 per cent).
Further, he said, 50 per cent of the agriculture credit is given in the months of January, February and March by which time the Kharif and Rabi crop seasons are over. It is no wonder that farmers complain that they are being shut out of funds when they need them, he said.
Declining rural banking
Lauding the nationalisation of banks in 1969 and the subsequent policy initiatives on priority sector as genuinely helpful to agriculture, Prof. Ramakumaar said that the financial inclusion agenda being followed now is not comparable in its impact. He said that the share of moneylenders had increased from 17 to 27 per cent during the first decade after the reforms era in India, which meant that the share of rural credit from the formal sources and public sector banks stood reduced. He called the 1990s the lost decade of rural banking.
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