Page 165 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 14: Rural Credit and Marketing
Dilfraz Singh, Lovely Professional University

Unit 14: Rural Credit and Marketing Notes

CONTENTS
Objective
Introduction
14.1 Rural Credit in India
14.2 Credit Delivery Mechanism in Rural Finance: Multi Agency Approach
14.3 Rural or Agricultural Marketing
14.4 Summary
14.5 Key-Words
14.6 Review Questions
14.7 Further Readings

Objectives

After reading this Unit students will be able to:
• Explain the Rural Credit in India.
• Discuss the Rural Marketing or Agricultural.

Introduction

Farmers often borrow from their own relatives in cash or kind in order to tide over temporary
difficulties. These loans are generally contracted in an informal manner; they carry low or no interest
and they are returned soon after the harvest. Farmers, particularly small farmers and tenants, depend
upon landlords and others to meet their financial requirements. This source of finance has all the
defects associated with money-lenders, traders and commission agents. Interest rates are exorbitant.
Often the small farmers are cheated and their lands are appropriated. The landless labourers are
forced to become bonded slaves. What is worse, this source of finance is becoming more important.
Marketing of his produce is the most important activity of a farmer. This is particularly tore in the
case of small farmers who have surpluses for marketing.
14.1 Rural Credit in India

The financial requirements of the Indian farmers can be classified into three types depending upon
the period and the purpose for which they are required :
Period of Credit
(a) Farmers need funds for short periods of less than 15 months for the purpose of cultivation or
for meeting domestic expenses. For example, they want to buy seeds, fertilisers, fodder for
cattle, etc. They may require funds to support their families in those years when the crops have
not been good or adequate for the purpose. Such short-period loans are normally repaid after
the harvest.
(b) The farmers require finances for medium period ranging between 15 months and 5 years for
the purpose of making some improvement on land, buying cattle, agricultural implements, etc.
These loans are larger than short-terms loans and can be repaid over longer periods of time.
(c) The farmers need finances for the purpose of buying additional land, to make permanent
improvements on land, to pay off old debt and to purchase costly agricultural machinery. These
loans are for long periods of more than 5 years.

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