Banks account for a fraction of all credit to poor farmers

NSSO surveys show incidence of indebtedness among cultivator households has risen over past decade

Do farm loan waivers actually benefit the intended beneficiaries?

Data from NSSO surveys show that incidence of indebtedness among cultivator households has risen  over the past decade. But, much of this lending flows from non-institutional sources such as money lenders and relatives. Institutional or formal credit accounts for 28 per cent of credit to the poorest of rural households and is priced at much lower interest rates compared to those informal sources.  Part of the problem is that income from small farms is simply not enough. As such, households tend to rely on other sources such as livestock and non-farm sources. This in turn impacts  the productive investment in agriculture.