Institutional credit to agriculture reached an all-time high of ₹25.10 lakh crore during 2023-24, reflecting the importance of financing in driving agricultural growth, according to RBI Deputy Governor Swaminathan J.
He also highlighted that Indian agriculture faces a demographic challenge, with the average age of farmers now at 50.1 years, underscoring the need to attract younger generations to the sector.
“Approximately 7.4 crore active Kisan Credit Cards have emerged as vital tools for providing timely and flexible credit, especially for short-term needs. However, addressing regional disparities in access to credit remains critical.
“If we can ensure that all farmers, irrespective of their location, have access to adequate and timely financing, we will be better positioned to address the challenges of sustainability and resilience in agriculture,” Swaminathan said in his recent keynote address at the International Research Conference hosted by the College of Agricultural Banking (CAB), Pune.
He observed that traditional lending practices have certain limitations in catering to the needs of the agricultural sector. Agriculture is inherently seasonal, and returns are often delayed or reduced.
“Innovative financial solutions are necessary — ones that are flexible and tailored to the specific needs of farmers. This coupled with crop insurance products that cover weather-related risks can help mitigate the uncertainties farmers face,” the Deputy Governor said.
Additionally, blended finance models — where public funds are used to leverage private investments — can be instrumental in providing the necessary capital for sustainable transitions. This would not only mobilise resources from multiple sources but also distribute the risks and returns more equitably.
Low farm mechanisation
Swaminathan said the low level of farm mechanisation poses a significant obstacle to enhancing agricultural productivity in India.
Labour shortages during peak farming seasons, combined with demand for higher wages, further aggravate this issue, making it difficult for farmers to maintain optimal output.
He emphasised that modern farming techniques and increased mechanisation will not only boost productivity but also play a pivotal role in empowering women.
“By alleviating the physical demands of traditional farming, mechanisation and agro-processing can open up new opportunities for women, enabling them to make a greater impact on agricultural productivity and the broader rural economy,” Swaminathan said.
Climate change
The Deputy Governor noted that climate change and sustainability are two pressing issues that have captured global attention.
“In recent years, we have witnessed a surge in extreme weather events, including severe droughts, cloudbursts, flooding, landslides, receding coastlines, and the alarming melting of Arctic ice and Himalayan glaciers.
“Wildfires have become more frequent and intense. Tragically, the most vulnerable communities — those who have perhaps contributed the least to climate change — are bearing the brunt of its devastating impacts,” he said. In this context, sustainable agriculture emerges as a crucial solution.
Sustainable agriculture refers to farming practices that meet today’s food needs while preserving resources for future generations. This means adopting methods that protect the environment, reduce reliance on chemical inputs, use water and land efficiently, and ensure social and economic equity for farmers, Swaminathan said.
Most hit sector
“When we consider the various sectors of the Indian economy, the agricultural sector stands out as one bearing the heaviest burden of climate change.
“Today, agriculture is at the confluence of three of the greatest challenges of the 21st century – sustaining food and nutrition security, climate change adaptation and mitigation, and sustainable use of critical resources such as water, energy and land,” he said.
Swaminathan noted that climate change is already reshaping traditional agricultural practices and even affecting our food choices.
The impact is far-reaching highlighting the urgency for farming and the food industry to adopt greener practices and contribute to climate mitigation.
