Agriculture and Allied Sectors (Part -V)

The Union Government launched the Interest Subvention Scheme in 2006-07, to provide short-term agricultural loans up to Rs. 3 lakhs at an annual interest rate of 7% for farmers engaged in agriculture and allied activity. Initially, additional 2% subvention was also provided for prompt and timely repayment of loans. In the Union Budget 2011-12, additional interest subvention was increased from 2% to 3% for farers on timely payment of bank loan. Thus, the effective interest rate became 7-3-4%. This interest subvention scheme was modified in 2022. Under the modified scheme, lending institutions such as public sector banks, regional rural banks, or cooperative banks are provided with 1.5% interest subvention from 2022-23 to 2024-25. However, farmers will continue to avail short term (upto one year) agricultural credit upto Rs. 3 lakh at interest rate of 4% per annum while repaying the loan in time. This benefit would not accrue to those farmers who repay their agricultural loans after one year of availing such loans.

Land revenue is not included in the running cost capital of a farm whereas cost of seeds, fertilizers and irrigation water will be included in it, because they are al part of the agricultural input.

Availability of animal husbandry (pastoralism), cottage industries and good equipments are the main contributors in the rural economy. Rather than other three the contribution of option (c) is very limited in the rural economy. Therefore, option (c) is the most suitable answer.

The main principle of agricultural finance includes objective (purpose), person and Productivity planning.

The source of agricultural finance in India are divided into two categories :

A. Institutional sources, in which the prominents are :

(1) Cooperative Societies and Banks

(2) Commercial Banks

(3) Regional Rural Banks

(4) Government

B. Non-Institutional source : Private money-lenders, relatives, businessman, zamindar etc.

The source of agricultural finance in India are divided into two categories :

A. Institutional sources, in which the prominents are :

(1) Cooperative Societies and Banks

(2) Commercial Banks

(3) Regional Rural Banks

(4) Government

B. Non-Institutional source : Private money-lenders, relatives, businessman, zamindar etc.

A District Co-operative Central Bank (DCCB) is a cooperative bank operating at district level in various parts of India. They were established to provide banking to the rural hinterland for the agricultural sector. As per the RBI data released in September, 2023, in the year 2022-23 (P) the share in total credit flow to agriculture of all cooperative Banks/Institutions (SICBs, DCCBs and PACS) is only 10.80%, as compared to 76.86% of Commercial Banks and 12.34% of Regional Rural Banks (RRBs). Hence, statement (1) is incorrect.

Functions of DCCBs are -

• To meet the credit requirements of member societies

• To maintain close and continuous contact with 'Primary Agricultural Credit Societies' (PACS) and provide funds and leadership to them.

• To superwise and impact the PACS.

Hence, statement (2) is correct.

Long-term agricultural credit is provided by separate cooperative banks called Land Development Bank. They were previously Known as Land Mortgage Banks.

As per the NABARD's Annual Report 2021-22, Commercial Banks accounts for about three-fourth of the total institutional credit (short-term plus long-term) flow to agriculture during 2021-22. The share of Commercial Banks in total agriculture credit flow increased from 53.7% in 1999-2000 to 76.86% in 2022-23 (P), while the share of Co-operative Banks/ Institutions declined from 39.5% to 10.80% during this period. Regional Rural Banks (RRBs) also have expanded their share of institutional credit flow to agriculture sector from 6.9% to 12.34% between this period.

As per the NABARD's Annual Report 2021-22, Commercial Banks accounts for about three-fourth of the total institutional credit (short-term plus long-term) flow to agriculture during 2021-22. The share of Commercial Banks in total agriculture credit flow increased from 53.7% in 1999-2000 to 76.86% in 2022-23 (P), while the share of Co-operative Banks/ Institutions declined from 39.5% to 10.80% during this period. Regional Rural Banks (RRBs) also have expanded their share of institutional credit flow to agriculture sector from 6.9% to 12.34% between this period.