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the state while 3828604 KCCs were issued since its inception involving a credit outlay of ` 25608 AGRICULTURE AND ALLIED SECTORS
crores .661508 farmers were covered under Personal Accidental Insurance Scheme) linked to KCC.

Investment Credit

2.161 Starting from 2000, the share of production credit (which accounts for major portion of the
credit) in the total agricultural credit has been going up whereas the share of investment credit has
come down from 21 per cent in 1999-2000 to 11 % in 2011-12. (Table 2.4)(It has picked up albeit
marginally in the last one year to 13 per cent in 2012-13). This is not favourable for accelerating
agricultural growth. A balance between short term and long term investment credit ought to be brought
in to maintain sustainable agricultural growth. The declining share of investment credit indicated
that farmers seem to borrow more short term credit in order to meet their input needs to maintain
continuity in agricultural operation. and do not pay adequate attention to adequate capital formation
for agriculture. Lack of landed property for collateral and the fragmented size of holdings,lack of
bank wise targets, lack luster performance of long term cooperative credit societies as well as lack
of interest rate subvention for investment credit could be reasons for low investment credit in the
state.

Table 2.4
Production and Investment Credit to agriculture in the state.

Year Production credit Investment credit Total
2008-09 14605 (78%) 4224 (22%)
2009-10 18817 (78%) 5307 (22%) 18836
2010-11 23512 (82%) 5141 (18%) 24124
2011-12 30405 (89%) 3901 (11%) 28653
2012-13 32651 (87%) 5059 (13%) 34306
37710

Priority sector lending

2.162 Agriculture is one of the most important employment intensive sectors of the economy, and
as such a sub-target of 18 per cent of ANBC (Adjusted Net Bank credit) is prescribed for priority
sector lending inorder to ensure adequate credit flow to this sector. While there have been concerns
about non-adherence to this target by banks in general, a further disaggregated analysis shows that
only about one fourth of total agricultural credit is going to small and marginal farmers( RBI 2012)
Importantly, 13.6 per cent of total agricultural credit was absorbed by corporate, partnership firms
and institutions engaged in agriculture, as on the last reporting Friday of March 2011 Data on credit
to micro and small enterprises also revealed a bias in favour of relatively bigger enterprises. Thus,
within the priority sectors, especially within agriculture and micro and small enterprises, majority of
loans are concentrated in relatively larger accounts. There is a need to change credit concentration
within the priority sector in order to further facilitate the process of inclusive growth. (Report on Trend
and Progress of Banking in India, RBI, 2011-12).

2.163 With regard to priority sector lending in Kerala commercial banks have shown an impressive
record in the last decade. From 42 per cent in 1992 and 2000, the share of priority sector advances
to total advances has jumped to nearly 60 per cent in 2014. As on March 2014,the total advances
outstanding under priority sector was ` 130704 crores out of which advances to agriculture was to
the tune of ` 53244 crores (40 .7 per cent ). The banking sector in Kerala have consistently over
achieved the targets by advancing 59.14 per cent for the priority sectors in 2013-14 Also within the
priority sectors, advances to agriculture is 25.42 per cent while target is just 18 per cent . This has

Economic Review 2014