Indian agriculture is overwhelmingly a small farmers enterprise with proportion of small and marginal land holdings (below 2 ha) constituting nearly 83 per cent of the total holdings in India. But these resource poor farmers are mostly unable to meet their financial liabilities from their limited income and are generally indebted. The lack of institutional credit has remained a major constraint in the economic enlistment of these people, despite the significant strides achieved in terms of spread, network and outreach of rural financial institutions like commercial banks, reginal rural banks, cooperative banks/ societies etc. since independence. The quantum of flow of institutional financial resources specifically to these farmers continues to be inadequate which is one of the major constraint in the adoption of new technological practices, land improvements and building up of irrigation and marketing infrastructure, severely, affecting the income of these farmers and making themdependent on non institutional credit which is exploitative in nature.
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