Agriculture requires substantial capital commitment , as procurement of equipment remains a significant spend for most farmers , writes Prabhat Chaturvedi , CEO , Netafim Agricultural Financing Agency
Agriculture is a dominant sector of the Indian economy , with approximately 85 percent of farm holdings being less than 2 ha in size , still producing sufficient food and fiber for our large population of 1.41 billion . In addition , it generates some net export surplus . It would not have been possible without a massive credit infusion to farmers . Access to adequate , timely , low-cost credit from institutional sources is essential , especially for small and marginal farmers . The policymakers have initiated several measures to improve the accessibility of farmers to institutional sources of credit . These policies have emphasized progressive institutionalization for providing timely and adequate credit support to all farmers . Thus , focusing on enabling small and marginal farmers to improve agricultural practices .
Even though the country has taken some proactive steps in heralding reforms in agricredit to provide financial assistance to the farmer community , it is still behind compared to some neighboring nations . While the volume of credit has improved over the decades , its quality and impact on agriculture have only weakened . Agriculture requires substantial capital commitment , as procurement of equipment remains a significant spend for most farmers . Still , most agricultural credit extended to farmers is of a working capital nature , thus stagnating more than 80 percent of farmers ' income .
Current scenario
The analysis of Indian credit demand suggests
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