Agricultural credit

Story hook

It is 1 February 2024. Union Budget speech: "Agricultural credit target raised to Rs.20 lakh crore for 2024-25." For context: in 2003-04, the target was Rs.80,000 crore. The number has multiplied 25 times in 21 years.

Yet on the same morning, a survey by NSSO (NAFIS 2022) shows that ~30% of agricultural households still borrow from non-institutional sources — moneylenders, traders, family — at 24-36% annual interest. Among small + marginal farmers in the eastern states (Bihar, Odisha, West Bengal), the share is closer to 45%. The Reserve Bank's Priority Sector Lending mandate requires banks to hit 18% of net bank credit on agriculture, yet many private banks meet it only by buying PSLCs (Priority Sector Lending Certificates) from rural-overshoot peers.

For UPSC, agricultural credit is where Indian banking history (cooperatives → nationalisation → NABARD → KCC) meets contemporary policy (KCC for fisheries, agri-stack, JLG / SHG financing). The arc is one of gradual replacement of moneylenders, but not their elimination.

Why this matters for UPSC

GS-III tests "credit access, financial inclusion, NABARD's role" almost every cycle. Prelims hits at least once per year — 2023 (PSL), 2022 (KCC), 2018 (NABARD Refinance), 2017 (Cooperative banks), 2014 (RRBs). Honest weightage: 1 question per year Prelims; 1 Mains question every 2 years.