Question

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p act of globalisation on India
ad the following paragraph, understand and interp
Most small farmers have to borrow money to
ng capital. They borrow from large farmers or t
s or the traders who supply various inputs to
of interest on such loans is very high. The
ss to repay the loan.
(OR)
ur doctyo uffer
as Jat streams
the neigbouring all​

Answer 1

Answer

Definition of agricultural Finance ,nature-scope, meaning , -micro &macro finance

Meaning:

Agricultural finance generally means studying, examining and analyzing the financial aspects

pertaining to farm business, which is the core sector of India. The financial aspects include

money matters relating to production of agricultural products and their disposal.

Definition of Agricultural finance:

Murray (1953) defined agricultural. finance as “an economic study of borrowing funds

by farmers, the organization and operation of farm lending agencies and of society’s

interest in credit for agriculture .”

Tandon and Dhondyal (1962) defined agricultural. finance “as a branch of agricultural

economics, which deals with and financial resources related to individual farm units.”

Nature and Scope:

Agricultural finance studied at both micro and macro level. Macrofinance deals with different

sources of raising funds for agriculture as a whole in the economy. It is also concerned with the

lending procedure, rules, regulations, monitoring and controlling of different agricultural credit

institutions. Hence macro-finance is related to financing of agriculture at aggregate level.

Micro-finance refers to financial management of the individual farm business units. And it is

concerned with the study as to how the individual farmer considers various sources of credit,

quantum of credit to be borrowed from each source and how he allocates the same among the

alternative uses with in the farm. It is also concerned with the future use of funds.

Therefore, macro-finance deals with the aspects relating to total credit needs of the agricultural

sector, the terms and conditions under which the credit is available and the method of use of total

credit for the development of agriculture, while micro-finance refers to the financial management

of individual farm business.

Significance of Agricultural Finance:

1) Agril finance assumes vital and significant importance in the agro – socio – economic

development of the country both at macro and micro level.

2) It is playing a catalytic role in strengthening the farm business and augmenting the

productivity of scarce resources. When newly developed potential seeds are combined with

purchased inputs like fertilizers & plant protection chemicals in appropriate / requisite

proportions will result in higher productivity.

3) Use of new technological inputs purchased through farm finance helps to increase the

agricultural productivity.

4) Accretion to in farm assets and farm supporting infrastructure provided by large scale

financial investment activities results in increased farm income levels leading to increased

standard of living of rural masses.

5) Farm finance can also reduce the regional economic imbalances and is equally good at

reducing the inter–farm asset and wealth variations.

6) Farm finance is like a lever with both forward and backward linkages to the economic

development at micro and macro level.

7) As Indian agriculture is still traditional and subsistence in nature, agricultural finance is

needed to create the supporting infrastructure for adoption of new technology.

8) Massive investment is needed to carry out major and minor irrigation projects, rural

electrification, installation of fertilizer and pesticide plants, execution of agricultural p