Daily Answer Writing And Mentorship Program


Q: What is Agri-Credit, and how does it support the agriculture sector in India? Discuss the key steps taken over the years to improve the Agri-credit           situation in the country. (10 Marks, 150 words)

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Agri-Credit is a credit designed to meet the financing needs of agricultural farmers and businesses. It enables farmers and agricultural enterprises to access funds for Agri- production, equipment purchase, expanding operations, warehousing etc.


How does Agri Credit support Agriculture Sector:

  • Spectacular growth in Agri credit sector (from 2% of Agri-GDP in 1970s to around 40% in 2019-20).
  • Enhanced Agri productivity leads to food security.
  • Increased investment in agriculture infrastructure such as irrigation systems, storage facilities etc.
  • Diversification and Modernization: Easy credit can give farmers scope to new crops, adopt organic farming, or invest in livestock sector.
  • Income Stability for farmers: Easy farm credit can reduce dependency on unauthorized money lenders and allow them to meet their expenses through institutional credit.


Steps Taken to Promote Agri-Credit over the years:

  • Nationalization of Commercial Banks in 1969, Establishment of Regional Rural Banks in 1976 and setting up of NABARD in 1982 led to increasing farm credit.
  • Priority Sector Lending (PSL) norms initiated in 1974, mandates all domestic commercial banks (and foreign banks with 20 or more branches) to earmark 18% of loans for farm credit.
  • The Kisan Credit Card (KCC) introduced in 1998, is aimed at providing adequate and timely short-term credit needs for farmers and has now been extended to fishery and animal husbandry sector also.
  • Modified Interest Subvention Scheme, operational since 2006-07, provides short term Agri credit of up to Rs 3 lakh at a subsidized interest rate of 7% per annum to farmers engaged in agriculture and allied activities.
  • The Agriculture Infrastructure Fund announced as a part of AtmaNirbhar Bharat Abhiyan will further boost the credit flow to Agri-sector.


The steps taken over the years to improve Agri-Credit in India have played a pivotal role in supporting the agriculture sector and empowering farmers. The positive strides made in Agri-Credit have not only empowered farmers but have also laid a strong foundation for a prosperous and resilient agricultural sector, driving India’s journey towards food security, rural prosperity, and economic well-being.