A Review of Current Noticeable Trends in Institutional Credit to Agriculture in India

Agriculture sector plays a vital position in India's economy. It accounts for about 19 per cent of GDP of the country. A large proportion of the population in India is rural agricultural and allied sector based and exclusively depends upon the agriculture for their livelihood creation. Development agriculture sector is crucial for the development of all other sectors including industrial sector in the country as they are inter-related. Agricultural credit is considered as one of the most basic input for conducting all agricultural development programmes. Identifying the importance of agriculture sector in India's development, the Government and the Reserve Bank of India (RBI) have played a vital role in creating a broad-based institutional framework for catering to the increasing credit requirements of the sector. Banking sector plays a major role as the commercial banks are the major source of institutional credit for agriculture sector in India. In this paper, an attempt is made to assess the current observable trends in institutional credit to agriculture specially focusing the role of commercial banks in India. The study reveals that commercial banks in India maintain the predominant role in financing agriculture in the country.