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Indian Economic Policy

Notes years. The small and marginal farmers are apparently getting credit in larger proportion, viz., 35 per
cent of the total. But since these farmers depend mainly on credit for the purchase of their inputs, the
available credit to them is still inadequate. In other words, even though the share of the weaker
sections of the rural community has been steadily increasing over the years and is, at present, placed
around 40 per cent of the total, this share falls short of their essential production needs.
There is also the problem of uneven distribution of co-operative benefits as between different States.
For instance, the loans advanced per member varied widely; the farmers of Gujarat, Punjab, Haryana
and Tamil Nadu are getting much more than those in Orissa, Bihar, U.P. and West Bengal. Viewed in
another way, that is, in terms of average credit per hectare of cropped area, it is only in five States,
namely, Gujarat., Haryana, Kerala, Punjab and Tamil Nadu, that such credit is much higher than
(double or more than double) the All-India average.
Apart from considerable regional disparities in credit availability, the co-operatives have not been
able to ensure an increasing flow of production loans and investment credit in most of the tribal and
hill areas.
Moreover, though the co-operatives have now come to cover almost the entire countryside, the
membership is only around 45 per cent of the rural families; agricultural labourers and rural artisans
constituted only 10 per cent of the total membership. The weaker sections of the rural community are
still not adequately represented in the membership roll.
In the ultimate analysis, the most outstanding of the weaknesses, which indeed is at the root of many
of the shortfalls in the co-operative performance, is in the area of management. There has been
considerable discussion over the years at all levels in regard to the need for proper man-power
development in the co-operative sector. Not much progress has taken place. The co-operatives
themselves have shown a singular lack of appreciation of this problem.
Long-Term Rural Credit: Cooperative Agriculture and Rural Development
Banks (CARDBs)

Land Mortgage Banks

The long-term requirements of the farmers were traditionally met by the money-lenders but later by
other agencies also, such as the State Governments and the co-operative credit banks. But these agencies
were found defective for one reason or another. There was, thus, a great need in India for an institution
specially designed to cater to the long-term credit needs of the agriculturists, which would offer
long-term funds at moderate rates and recover loans in annual or semi-annual instalments spread
over a number of years. Initially, land mortgage banks were organised for the purpose of providing
long-term credit to farmers. These banks were later called land development banks. In recent years,
they have been renamed as cooperative agricultural and rural development banks. (CARDBs). These
are classified into Primary Co-operative agricultural and rural development banks (PCARDBs) and
State Co-operative Agricultural and Rural Development Banks (SCARDBs).
The real beginning in land development banking was made by Madras with the organisation of
central land development bank in 1929 for centralising the issue of debentures and for co-ordinating
the working of primary banks in the State. The progress of land development banking has been very
slow and also uneven. During the great depression, (1929-33) land-development banks received some
stimulus as agricultural prices fell considerably and the farmers needed financial assistance. But
with the Second World War, the farmers experienced a good measure of prosperity and were in a
position to repay their debts with the land development banks. But after Independence, land
development banks have been enjoying a great degree of prosperity. However, it is important to note
that whatever progress was achieved was concentrated in only a few States, viz., Andhra, Tamil
Nadu, Karnataka, Maharashtra and Gujarat. The number of PCARDBs and their branches increased
from 286 in 1950-51 to 696 in 2005-06, while that of State cooperative agricultural and rural development
banks (SCARDBs) increased from 5 to 20 during the same period.
Total loans advanced by PCARDBs during 2005-06 were ` 2,250 crores and the loans outstanding at
the end-March 2006 stood at ` 12,740 crores. On the other hand, SCARDBs had sanctioned loans

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