Recent Trends in Agricultural Credit

Although agriculture now accounts for only 14 per cent of Gross Domestic Product (GDP), it is still the main source of livelihood for the majority of the rural population. Agriculture is the most important sector in India in terms of the population dependent on it. With more than two third of the population engaged in agriculture related activities. A country with one billion population, and 56 per cent workforce engaged in agriculture means this is the only sector where such a huge force is engaged. Many countries in the world even do not have their total population, which India is having the workforce engaged in agriculture. As such rapid growth of agriculture is critical for development of rural economy. A viable development of rural economy will leads to inclusive growth. Thus, it is imperative to study the constraints faced by Indian farmers. Like other sectors, agriculture also requires capital. Capital implies the credit required for the purchase of inputs and machinery. In a poor agricultural country like India, where savings are negligible among the small farmers, agricultural credit appears to be a critical factor affecting agricultural productivity (Goayal, 2014: 22). For many Indian farmers, it is inevitable to incur debt within every stage of the agricultural process. The main obstacles before Indian agriculture are finance. Unlike industry, agriculture is not getting proper credit. As a result, labours are migrating from agriculture to industry in order to earn two squares meal.