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India: Is agriculture credit being used for the right purpose? RBI questions by Sanjeeb Mukherjee September 16,2019   |  Source: Business Standard

Is farm credit going into the right hands? Well, the country’s apex bank has questioned it. In the latest report of its Internal Working Group to review agricultural credit, the Reserve Bank of India (RBI) says it found that in some states, credit disbursal to the farm sector was higher than their agricultural gross domestic (GDP) product. So, indicating the possibility of diversion of credit for non-agricultural purposes. Kerala, Tamil Nadu, Telangana, Karnataka and Punjab came in this category.

In Kerala and Tamil Nadu, according to the report, agricultural credit was almost 180 per cent more than the average agriculture GDP of the state in the years 2015, 2016 and 2017. In Andhra, the ratio of crop loans disbursed to input requirement in 2014, 2015 and 2016 was a staggering 7.5 times more. Also raising the question on whether the credit is being used as intended.

The ratio of crop loans disbursed to input requirement was not only unusually high in some states — it was also highly unevenly distributed. In Goa, the report says, five times more farm credit was disbursed in 2014, 2015 and 2016 than its input requirement. It was six times more in Kerala, four times more in Telangana, Tamil Nadu and Uttarakhand, and three times more in Punjab.

In contrast, Jharkhand,

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