Revitalising Farm Credit

Revitalising Farm Credit There have been many committees on agricultural credit since independence, but few have looked at the subject in as holistic a manner as the Expert Group on Agricultural Indebtedness (constituted by the union finance ministry and chaired by the economist R Radhakrishna) has done in its report recently submitted to the government. The value of the committee’s recommendations is not only in the quality of measures on credit expansion that have been suggested but also in its analysis of what it distinguishes as the “agrarian” from the “agricultural” crisis afflicting India’s farm sector. The message is simple: unless steps are taken to address the structural problems in agriculture, taking measures concerning farmers’ indebtedness/lack of credit alone will be like dealing only with the symptom.

Degradation of the environment, plateauing of yields from current (old) farm technology and, most important, the withdrawal of state support (in the form of public investment and support to agricultural research) are seen as part of the agrarian crisis, which has resulted in an agricultural crisis of, among other things, a slowdown in output growth of almost all crops. The expert group views both the crises as most strongly felt in the dry land areas of the country, which is where the phenomenon of farmer suicides appears most virulent.