DEPARTMENT OF AGRICULTARAL ECONOMICS
IMPACT OF AGRICULTURAL FINANCE ON INDIAN ECONOMY
VENUE: Seminar Hall Date: 02.11.2012 Time: 3:00PM Synopsis
Agricultural finance generally means studying, examining and analyzing the financial aspects pertaining to farm business, as a core sector. Agriculture plays a crucial role in the development of the Indian economy. The importance of farm credit as a critical input to agriculture is reinforced by the unique role of Indian agriculture in the macro-economic framework and its role in poverty alleviation.
Credit is an important determinant of value addition in agriculture. A quick assessment by the Reserve Bank of India. the relationship between institutional credit to agriculture (from commercial banks, cooperatives and RRBs)has shown evidence of positive and statistically significant elasticity, that is annually every 1 per cent increase in real agricultural credit results in an increase in real agricultural GDP by 0.22 per cent.
Modes of agricultural finance- Direct Finance Ex; crop loans Finance to individual Farmers [including Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e. groups of individual farmers] for Agriculture and Allied Activities. Indirect Finance Ex; Loans to Non-Banking Financial Companies (NBFCs) for on lending to individual farmers. (i) Credit for purchase and distribution of fertilizers, pesticides, seeds, etc. (ii) Loans up to Rs. 40 lakh granted for purchase and distribution of inputs for the allied activities such as cattle feed, poultry feed, Finance for setting up of Agri-clinics and Agribusiness Centers.Classification of credit: Based on the repayment period of the loan. It is Sub-divided in to 3 types- Short–term loans,...