A Report On Agricultural Growth Essay

1559 Words Aug 19th, 2015 7 Pages
Agricultural growth must be underpinned by a reliable and efficient financial system capable of making compatibility between the expansion or adequacy of credit flow and both the investment and working capital needs of the agricultural sector. The financial sector reforms of 1991 had created a basic fear that this would lead to the dilution of the directed credit policy or priority sector lending by the commercial banks and the deregulation of interest rates which consequently reduced the flow of credit to agricultural sector along with higher interest rates on agricultural loan amounts. However, the recommendations of the Narasimhan Committee were not accepted. Instead, what the authorities have done has been to nullify, through the back door, the operational relevance of the priority sector target by including vast numbers of items which, by no stretch of imagination, can be conceived as belonging to the weaker sections borrowing small loans, who would not possess other bankable projects and who would otherwise face difficulty in getting bank credit. During 2000-01, the definition has been expanded to cover bank finance to agriculture through NBFCs and finance for distribution of inputs for activities allied to agriculture, that is, agri-clinics and agri-businesses, up to Rs 15 lakh (raised from Rs.5 lakh) (EPWRF, 2008). Recent trends in credit deployment show that there has been a structural shift in credit delivery…

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