Magnitude and Incidence of Agricultural Indebtedness in Bihar

Abstract

In Bihar, the inadequate saving and poor access to institutional credit institutions, the majority of farmers rely on non-institutional credit. In Bihar the proportion of indebted farmers increased but the institutional indebtedness declined and non-institutional indebtedness increased in Bihar. With regard to farm size-wise indebtedness (institutional and non-institutional) revealed that the majority of marginal farmers (86.9%) are indebted which declines with the increase in the farm size. Agricultural loans granted by commercial banks also increased from ` 325 crore to ` 1916 crore during the period however, their share in total institutional agricultural credits in Bihar increased from 59.31 per cent to 64.19 per cent during the last 7 years. The performance of the co-operative has not been satisfactory since its agricultural credit portfolio increased by about two fold and its share in agricultural credit flow declined from 26.64 per cent in 2001 to 9.11 per cent in 2006–07.. Per hectare agricultural loan disbursement increased from ` 882 in 2000–01 to ` 4814 in 2006–07 in Bihar whereas it increased from ` 3386 to ` 11363 at national level during the period (Table 10). Despite the best efforts the institutional financing agencies could provide per hectare quantum of loan in Bihar in 2006–07 which was achieved at national level in 2002–03. The agricultural loan is not only inadequate but there is skewed disbursement of loan in different agro-climatic zones of Bihar. Analysis of Agricultural credit data revealed that the Growth in agricultural credit was higher in Bihar (31%) than the corresponding growth achieved at national level (26%) during 2001–02 to 2006–07. It was mainly due to lower base of agricultural credit for Bihar.