Role of Institutional Credit for Agricultural Development in Bihar

Naturally endowed with fertile soil, adequate rainfall, rich water resources and congenial climate, Bihar is poised for high farm productivity to lead the second green revolution in the country. Realising its importance, Government of Bihar adopted planned approach of agriculture development through Agriculture Road Maps since 2008. It aims to increase production and productivity of food crops in a cost-effective manner and make it a viable means of livelihood. The approach has put considerable emphasis on ensuring availability of certified seeds at subsidised rate, creating storage space, promoting bio-farming, farm mechanisation and new technique of System of Rice Intensification (SRI) cultivation. Although, institutional credit assumes utmost importance in increasing agricultural productivity, the role of formal credit delivery system in the State of Bihar has not been quite encouraging. The Credit Deposit (CD) ratio in Bihar stood at 44.03 per cent as in March 2015 against the national average of 78 per cent. The State Annual Credit Plan (ACP) target of ₹0.74 lakh crore (including Non-priority Sector) and target of agriculture and allied activities at ₹0.36 lakh crore for 2014-15 works out to less than ₹6800 per capita credit. Given the high credit elasticity of 0.574 in Bihar's agriculture, there is an urgent need to strengthen the institutional credit delivery system by encouraging all banks, particularly commercial banks, to play their role in the right earnest to secure agricultural prosperity in the State. The way forward in this regard is suggested in the paper.