Financing
the pastoral
To
reduce the pressure on land-based activities, secondary sectors of
the rural economy should be given prime importance by financial institutions,
says Dr AR Patel
During
the post-independence era the Government of India initiated various
policy measures to operationalise the implementation of certain reforms
pertaining to land and community development in order to accelerate
the process of improving the rural economy in general and modernising
the farm sector in particular.
The
Green Revolution saw the nationalisation of major private sector commercial
banks and establishment of approximately 196 regional rural banks
(RRB) with the objective of supporting the farm sector through the
provision of the much-needed credit. While these policy measures have
created an appreciable impact on the farm sector, there exists an
urgent need to involve rural financial institutions to support the
secondary and tertiary sectors of the rural economy such as landless
labourers, artisans, small borrowers, semi-skilled and unskilled beneficiaries.
Thus, a seamless integration of the farm sector with the non-farm
sector is now a sine qua non for accelerating the rural the economy.
Credit
disbursal
The
multi-agency approach to rural credit comprising the cooperative credit
structure, commercial banks (CB) and RRBs has improved the supply
of credit to the farm sector during the past 33 years as summarised
in Table 1.
The
average annual disbursements for agricultural purposes increased from
a mere Rs 743.8 crore in 1970-71 to Rs 1,154.12 crore during 1971-76
and Rs 2,579.22 crore during 1976-81 reflecting a 246 per cent growth
per annum. During the nineties, the supply of credit shot up to average
annual disbursements of Rs 30,083.73 crore indicating a 320 per cent
annual growth.
Production
credit
As
on March 31, 2002 there were 1,39,533 retail outlets of rural financial
systems in the country and these had as many as 838 lakh borrowal
accounts with an outstanding credit of Rs 64,000 crore. The share
of cooperatives both in terms of outlets and outstanding borrowal
accounts was as high as 67.8 per cent and 68.5 per cent respectively,
whereas the commercial banks accounted for 33.4 per cent outlets and
26.7 per cent borrowal accounts followed by RRBs at 8.8 per cent and
4.8 per cent respectively.
Production
credit as percentage to the total credit has remained almost the same
at 64.6 in 1997-98 and 64 in 2001-02. During the year 1997-98 and
2001-02, cooperatives, among all agencies, had a share of 52.8 per
cent and 52.6 per cent in the supply of production credit, whereas
the share of commercial banks’ was 40.4 per cent and 39 per cent respectively
during that period.
contd...
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