Agricultural Credit Flow in Kerala: An Analysis

Agricultural credit is highly important for a state like Kerala experiencing rapid shift from food crops to cash crops, severe labour shortage, deteriorating capital formation in agriculture, high cost of land, and increasing cost of cultivation. This paper has analysed the flow of credit to the agricultural sector in Kerala by computing the average credit per hectare of TCA, average credit per individual operational holding, and the percentage of agricultural credit to the total cost of cultivation (per hectare). The analysis has shown that agricultural credit has increased continuously in Kerala during the study period (1997–98 to 2008–09) both at current and constant prices. On the basis of per hectare agricultural credit flow, it may be concluded that the agricultural credit flow has been inadequate in Kerala. When it is compared with the cost of cultivation, the percentage of agricultural credit per hectare is found very low. At the state level, only 17 per cent of the cost of cultivation (per hectare) is met by the institutional sources. The study has suggested that this should be increased to the levels of credit granted to other sectors of the economy.