Page 31 - Banking Finance May 2021

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increased due to the use of modern technology, increase in telecommunications, electricity. There is need for
the use of fertilizers and pesticides, increase in irrigation investment in infrastructure for agri produce storage viz.
facilities and increase in coverage of area under high Warehouses, godowns, silos, cold storages. Besides, there
yielding varieties. is need for investment in food and agro processing industry.

As reported by NABARD, the banks in India disbursed Rs. The backward and forward linkages in the value chain of
12,54,762.20 crore in Financial Year 2018-19. The share of food and agro sector can be tapped for increasing
small and marginal farmers is Rs. 6,26,087.53 crore i.e. agriculture credit as finance to food and agro processing
49.90% out of total disbursement. industry up to Rs. 100.00 crore per borrower gets covered
under agri credit. Similarly, the regions may finance for agri
The Government of India has set agricultural credit target storage infrastructure e.g warehouses, cold storage chains,
at Rs. 15.00 lakh crore for FY2020-21. The government has grain silos as lending to agri infrastructure up to Rs. 100
proposed PM KISAN beneficiaries be covered under KCC crore per borrower also gets covered under agriculture
Scheme. Percentage of budgetary expenditure for agri and credit.
farmers' welfare is 4.67% only as per budget estimates of
2020-21. In 2018-19, the actual expenditure on PM KISAN Financing against warehouse receipts helps the farmers to
was Rs. 1241 crore against the budgeted estimate of Rs. overcome situations of glut in the market and prevents
75000 crore. distress sale. The scheme can be popularized by field level
functionaries.
Need for investment credit in agriculture: With latest
technologies, farmers are adopting the best practices to Farmer producer organizations: A financing model for
earn profit from farming activities. India has diverse agro- credit requirements of farmer producer organizations across
climatic conditions and has enough opportunities for both the entire supply and value chain can be designed to
Hi Tech and Traditional Agriculture. minimize the role of middlemen from farm to market.

Studies have shown that investment on roads or expenditure Way Forward
on agri research and extension are essential for agricultural
There is immense scope for further increase in agricultural
growth and poverty reduction and are more effective in the
credit portfolio. In metro and urban areas, there is potential
long run in reducing poverty than subsidies on fertilizers, for financing to food and agro processing industry, firms
irrigation etc. Rural or agricultural sector infrastructure
dealing in irrigation equipments, farm machinery and
include road networks, irrigation facilities, storage facilities,
construction of agri storage infrastructure etc. whereas the
rural and semi-urban areas have the potential to increase
direct farm lending.

In India, direct farm lending to small and marginal farmers
mainly constitute production line of credit. The focus must
shift to investment line of credit also.

References:
1. Agriculture Today, February 2020
2. Agriculture Credit Disbursement, Press Information
Bureau, Ministry of Finance, Government of India dt.
July 01, 2019
3. Union Budget 2020: The Economic Times, Feb 01, 2020.
4. Economic Times Newspaper

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