ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Agricultural Credit in the Post-Reform Era

The negative policy on credit for agriculture and other priority sectors, which has been prevalent since the beginning of the post-reform era, has manifested itself in three broad areas: the enervation of the institutional architecture for rural credit, disincentivisation of credit flow to agriculture through the mechanical application of Basel norms and the squeeze on resources available for agricultural credit operations. This paper discusses these areas and also the experience of a couple of advanced economies. It suggests a set of reforms which will reverse the policy coarctation for agricultural credit. It argues that the successful promotion of the deepening of rural financial markets, which would ensure uninterrupted flow of credit to agriculture will require systematic rather than isolated efforts, with related actions being undertaken on several fronts.

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