Revival of Agricultural Credit in the 2000s: An Explanation

This paper examines credit to agriculture provided by the commercial banks, including regional rural banks, and finds that contrary to the general perception that the credit revival began in 2004, the actual revival started after 2000. The increase in credit was to a large extent the result of a growing share of indirect finance, which, in turn, has been broadened in scope to cover many new kinds of farm lending. Moreover, even as direct lending to agriculture has also grown, there has been a sharp increase in the share of large-sized advances for financing agri-businessoriented enterprises, rather than for the small and marginal farmers.