Compensatory Afforestation

GS3: agricultural produce and issues and related constraints



What is the issue?
Recently, there is an intense discussion on the strategies needed for addressing farmer distress in India. Among others, assured and greater access to institutional credit has been proposed as a way forward.

BACKGROUND
The politicians believe that the removal of credit constraints is necessary to improve farmer welfare and support agricultural growth.
But, the academic studies state that in India, the correlation between the institutional agriculture credit and the agricultural growth is weak.
And no enough attention is given to a key policy question – Whether agriculture credit of such size contributes commensurately to agricultural growth.

Credit intensity
Reason to measure it – To assess the productivity of institutional credit to the agriculture sector.
Credit intensity of Agriculture sector = Agricultural credit /
There is a striking increase in the ratio of agricultural credit to agricultural GVA since 2005-06.
This reveals that the agricultural credit intensity has increased tremendously over the years.
Calculating agricultural credit implies that it has become less efficient in delivering agricultural growth.

DISCUSSION
Consequences of rural indebtedness
Rural indebtedness is also likely to have some undesirable social consequences. Due to ever-­growing debt there emerges in the rural economy of India a class of landless labourers and tenants.
Consequently independent or self-sufficient farm­ers gradually lose their identity.
The landless work­ers have nothing to offer as security in order to obtain loans from moneylenders, except their la­bour power.
the acquisition of land by the traders and moneylenders and the con­sequent deprivation of the poor farmers of their meager landed property was the root cause of the Naxalite movement.

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Location: Thiruvananthapuram, Kerala, India

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