Trends and pattern of institutional credit to agriculture sector with special reference to Tamil Nadu: A district level analysis

Adequate and timely availability of institutional credit at affordable rates of interest is critical to improving agricultural productivity in a way that is sustainable for the farmers. The Government of India, Reserve Bank of India and National Bank for Agriculture and Rural Development (NABARD) has initiated several policy measures to improve the accessibility of farmers to the formal credit. Due to the proactive policies, agricultural credit disbursement in the country increased from Rs.46268 crore in 1999-2000 to Rs.2155163 crore in 2022-23 at a compound annual growth rate (CAGR) of 19.81 per cent and that for Tamil Nadu increased from Rs.91856 crore in 2015-16 to Rs.305306 crore in 2022-23 and grew with CAGR of 16.93 per cent. There was an impressive increase in the credit intensity from Rs.46209 in 2015-16 to Rs.99727 per hectare in 2022-23 in the country. However, there exist significant regional disparities in it - Rs.21274 per hectare in North Eastern region to Rs.263730 per hectare in Southern region. At all- India level, the average loan disbursement per account for small and marginal farmer was Rs.97077 as against Rs.242870 for other farmers. The per hectare credit flow indicates that in Tamil Nadu, there was a remarkable increase from Rs.151228 in 2015-16 Rs.376294 in 2021- 22. However, there exists wide inter-district disparities as are indicated by the range of Rs.128664 per hectare in Mayiladuthurai district to Rs.1466205 per hectare in Kanniyakumari district. Only 15 districts out of the 38 had per hectare credit flow above the state figure. The agricultural credit disbursement in the state was Rs.119775 per account and it ranged from Rs.87977 in Nagapattinam district to Rs.176420 in Chennai district. Thus, the inter-districts disparities across the state in the disbursement of agricultural credit by the Banks is very significant. The ratio of agricultural credit to Net District Domestic Product (NDDP) varied from 2.42 per cent in Kancheepuram district to 56.75 per cent in Perambalur district and this ratio for the state is 14.75 per cent. While the ratio of agricultural credit to NDDP in 16 districts was less than the state average. The ratio of agricultural credit to Agriculture Gross State Value Added (AgGSVA) was 212.72 per cent in Tamil Nadu as compared to the 45.82 per cent for all India during 2021-22. The 65.1 per cent of the agricultural households in the state were indebted as compared to 50.2 per cent for all-India. The credit deposit (C-D) ratio varied from 72.74 per cent in Chengalpattu district to 218.14 per cent in Ariyalur district and this ratio for state is 112.95 per cent and for India (75.80%). The C-D ratio in 13 districts was less than the state average. There is a need to sensitise all ground level bank officials to saturate all eligible and willing farmers with KCCs under Ghar Ghar KCC Abhiyaan. The strategic task is to stimulate a convergence among credit availability to address glaring disparities in agricultural credit through re-orientation of the agricultural credit policy to the needs of the creditstarved regions and districts in general and small and marginal farmers in particular.