Access to Institutional Credit by Farmers in Eastern India

Abstract

The supply of institutional credit plays an important role in promoting agricultural growth and also saving the farmers from the clutches of private moneylenders who charge exorbitantly high rates of interest and force them to live in perpetual debt trap. There has been a phenomenal increase in the flow of institutional credit to agriculture in the recent years but this has been quite uneven between regions. As of 2018–2019, the Southern Region had the highest share (43.0 %) in the institutional credit followed by Northern Region (21.0 %), Central Region (13.6 %), Western Region (12.0 %), Eastern Region (9.0 %) and North Eastern Region (0.9 %) respectively. Despite so much talk about the need for green revolution in Eastern India, the institutional credit to agriculture in almost all the Eastern and North Eastern states has been very poor. Based on various standard criteria such as credit–deposit ratio, credit absorption capacity, level of agricultural diversification and untapped potentials for higher agricultural growth and poverty reduction, farmers in the eastern states deserve a better deal in terms of access to institutional credit. Besides, the article explodes the myth of low credit absorption of farmers in Eastern India.