| Abstract: |
The policy intervention in agriculture has been credit driven. This is even
more pronounced in the recent interventions made by the State, in doubling
agricultural credit, providing subvention and putting an upper cap on interest
rates for agricultural loans, the package announced for distressed farmers. We
use existing literature and data to argue that the causality of agricultural
output with increased doses of credit cannot be clearly established. We argue
that Indian agriculture is undergoing fundamental change wherein the
technology and inputs are moving out of the hands of the farmers to external
suppliers. This, over a period of time may have resulted in the de-skilling of
farmers and without adequate public investments in support services and
without appropriate risk mitigation products has created a near-crisis in
agriculture. Thus, we argue that policy interventions have to be necessarily
patient and holistic. Looking specifically at the rural financial markets,
using some primary data we argue that it is necessary to understand the rural
financial markets from the demand side. We conclude the paper by identifying
some directions in which the policy intervention could move, keeping the
overall rural economy in view rather than being unifocal about agriculture. |