The increase in agri credit flow during2007-08 was 11% (Rs 25,257 crore) and in 2008-09 was 13% (Rs 32,000 crore). Increase in bank credit during the corresponding periods was 22% and 17% respectively. The targeted increase in credit flow during 2009-10 is again 13% ( Rs 38,000 crore). Increase in credit flow to agri culture during 2007-08 and 2008-09 was thus less than increase in total bank credit during the corresponding periods as narrated above. Total bank credit is estimated to increase by 20% in 2009-10,where as targeted increase in agri credit is only 13%. Thus for all the three years agri credit growth was at less than total bank credit growth. Keeping the need for food security in view, it is essential that the growth in agri credit should at least be equal to the growth in total bank credit. Accordingly agri credit for fiscal 2010 should be fixed at Rs 3,45,000 crore aiming at 20% increase in the current year instead of Rs 3,25,000 crore at 13%.

’The government has set a target of Rs 3,25,000 crore farm credit for fiscal 2009-10, just 13% growth over the previous year figure of Rs 2,87,000 crore comprising of direct farm credit of Rs 2,60,000 crore and an indirect farm credit of Rs 65,000 crore. The direct farm credit target will comprise crop loans of Rs 2,00,000 crore with the rest being short-term loans. Bulk of the farm credit—Rs 2,28,000 crore—will come from scheduled commercial banks. Regional rural banks will provide Rs 37,000 crore and co-operative banks Rs 60,000 crore.’  10 Jun 2009, ET Bureau

Percentage share of small loans of Rs 25000 declined from 50% in 1990 to mere 10% in 2008. And loans of over Rs one crore skyrocketed by more than 400% during the same period. According to RBI data, institutional credit flow to farmers registered a compound annual growth rate of 47% between 2003 and 2007, but the number of farmer accounts grew by 22% and average loan per account increased by 20%.

According to the latest data, only 27% of cultivator households get formal credit. The rest, comprising mainly small & marginal farmers, have no access to credit, though their landholdings constituted nearly 80% of total holdings and 36% of area. NABARD Report]. The loaning should be extended to cover all these farmers in the next five years. By 2012,credit needs of agri sector are estimated at Rs 6 lakh crore by the study group of Planning Commission. Financial institutions should be strengthened to meet this requirement of Rs 6 lakh crore agri credit needed by farm sector by 2012. Inadequacy of farm credit continues to be one of the major bottlenecks hindering the growth in investment and growth in agriculture. The growth of direct finance to agriculture declined in 1990s (12%) as compared to 1980s (14%) and 1970s (around16%). The average share of long-term credit also declined from over 38% to around 36%, adversely affecting capital formation in agriculture.