Chapter 1 (Agricultural Finance - concept and scope) Flashcards
What is the meaning of agricultural finance?
Agricultural finance generally means studying, examining, and analyzing the financial aspects pertaining to farm business, including money matters related to production and disposal of agricultural products.
How did Murray (1953) define agricultural finance?
Murray defined agricultural finance as ‘an economic study of borrowing funds by farmers, the organization and operation of farm lending agencies, and society’s interest in credit for agriculture.’
How did Tandon and Dhondyal (1962) define agricultural finance?
They defined agricultural finance as ‘a branch of agricultural economics, which deals with financial resources related to individual farm units.’
What does macro-finance deal with in agricultural finance?
Macro-finance deals with raising funds for agriculture as a whole, lending procedures, rules, regulations, and the operations of agricultural credit institutions.
What is micro-finance in the context of agricultural finance?
Micro-finance refers to financial management of individual farm business units, including how farmers allocate borrowed funds among various uses.
Why is agricultural finance significant for rural development?
It strengthens farm businesses, increases productivity through technological inputs, supports infrastructure, reduces regional economic imbalances, and improves rural living standards.
What are the three basic economic activities in farm management?
Production activities, financing activities, and marketing activities.
How are financial decisions linked to production and marketing decisions?
Financial decisions determine the capital needed for production and marketing activities, such as selecting products and procuring inputs.
Why is agricultural credit important for modern farming?
It supports adoption of modern technology, facilitates investment, and creates an environment for higher productivity and income.
What are the main sources of agricultural credit?
Non-institutional sources (moneylenders, relatives) and institutional sources (cooperatives, commercial banks).
Why is institutional financing crucial for agriculture in India?
It provides adequate, timely, and liberal credit to farmers, supporting agricultural development policies.
What role did the nationalization of banks play in agricultural finance?
It expanded access to farm finance for neglected areas, emphasizing priority sectors like agriculture and small farmers.
Why is credit essential for Indian farmers?
Most farmers are small and marginal, with low income and savings. Credit breaks the cycle of low investment and low income.
What is the relationship between agriculture and capital requirements?
Like other industries, agriculture requires capital. Farmers often borrow due to uncertainties, low returns, and limited savings.
How does agricultural finance contribute to economic development?
It boosts input and output markets, supports infrastructure for new technology, and aids poverty alleviation programs.
