An Overview of Agricultural Credit and Crop Insurance in Bihar

Bihar is characterized by excessive dependence of population on agriculture and dominance of small land holders. Small and marginal farmers constitute about 90 per cent of total farm households, whereas farm households owning land less than 0.5 constitute 78 per cent of total farm households and their average farm size is about 0.10 hectare. The agricultural production has been showing declining trend during 2001-2007 and the income from agriculture is increasingly becoming insufficient to meet even the basic consumption needs of farm households. It is more so far small and marginal farmers whose income falls short of their consumption expenditure. Institutional bankers perform a gap-filling function in Bihar whereas the situation is just reverse in other parts of the country. Provision of credit to agriculture sector has been one of the main concerns of policy planners in India since independence. However, an assessment of the situation at ground level indicates that recourse to non-institutional credit continues to dominate as far as rural areas and agriculture sector are concerned. The paper tries to examine the credit policy, crop insurance related issues and the role self help groups can play in overall economic development in the state of Bihar, India