FINANCING SMALL FARMERS FOR INDIA’S FOOD SECURITY

Abstract [English]

According to the Global Hunger Report, India continues to be among nations where hunger is "alarming". It is most disappointing that despite high economic growth, the hunger index in India between 1996 and 2011 has insignificantly improved from 22.9 to 23.7. National Sample Survey Organization data revealed that the average per capita food expenditure per annum during the period from 1993 to 2010 increased only by 0.2 % annually in rural India and declined by 0.1% in the urban areas. At any given point of time, the cereal intake of the bottom 20% people in rural India which is engaged more in manual work continues to be at least 20% less than the cereal intake of the top decile of the population, despite their better access to fruit, vegetables and meat products. Endemic hunger continues to afflict a large proportion of the population. Agricultural Census [2010–11] revealed that out of 138.35 million operational holdings in India as high as 85% (which account for 44.6% of the total cultivated area) are small and marginal farmers [S&MFs] owning less than two hectares. This, therefore, characterises India’s agriculture a small-scale-farming. Average size of small-holding is only 0.61 hectare whereas overall average size of holdings declined from 1.33 ha in 2000–01 to 1.15 in 2010–11.The role of S&MFs in boosting food output and reduction of poverty is well recognized. Therefore, the future of sustainable agricultural growth, food security and poverty reduction in India depends on creating environment that enables huge number of S&MFs to easy, hassle-free and reliable access to institutional credit. Against this background, this article analyses the performance of Government–sponsored and Banks programs aimed at financing S&MFs and suggest enabling measures to achieve 8% target of credit to S&MFs within existing 18% credit to agriculture by 2017 as recently prescribed by the Reserve Bank of India [RBI].