Economic Affairs
Year : 2009, Volume : 54, Issue : 3&4
First page : ( 113) Last page : ( 117)
Print ISSN : 0424-2513.

Pattern of Utilization of Institutional Credit in Agriculture an Analysis

Singh S K, Head

Department of Agricultural economics, Udai Pratap Autonomous College, Varanasi. Email: sk_singh11@rediffmail.com

Abstract

The new agricultunil technology is usually capital intensive. The demand fix farm credit has increased manifold and it was realized that despite of considerable expansion of co-operative sector, it would not be able to meet the expanding needs of a credit in agriculture. Government therefore decided to adopt “multi-agency approach” to agricultural finance and directed the commercial banks to finance agriculture. The main objective for the liberation of institutional credit to the farming community was to help them in increasing their resource productivities through judicious use of modern farm inputs. The additional returns hom the contemplated productive investments are expected to be substantially higher that additional cost incurred on it. It is therefore, expected that borrowers will repay the loans along with interest due on it without any ditftcult. However, the past experience shows that this expectation of the policy planners and credit institutions is not holding true.

The proper utilization of credit increases the agricultural production and consequently, the repaying capacity of the borrower farmer. But on the other hand if the available credit is not utilized for the productive purposes, it will not increase the rate of capital information in agricultural sector. The study of utilization of available credit is equally important as it indicate that whether the credit taken is being used properly or it is diverted investigation was an attempt to examine the source of finance, purpose wise utilization of credit, unproductive use of credit, and reason’s of diversion of credit.

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