HYDERABAD: Since the formation of Telangana, agriculture credit disbursement has increased about 425 per cent in the state with agriculture loans rising from Rs 30,517 crore in 2014-15 to Rs 1,60,501 crore in 2025-26.
According to information provided by the Ministry of Finance in Parliament, the highest-ever credit disbursement of Rs 1,64,908 crore was registered in 2024-25. Year-on-year, the state has almost always witnessed growth in agriculture loans. During 2016-17, disbursement of agriculture credit more than doubled to Rs 67,739 crore from Rs 33,326 crore in 2015-16. For the first time, disbursement crossed Rs 1 lakh crore (Rs 1,09,798 crore) in 2022-23.
Officials attributed this significant increase in agriculture loans to increase in crop investment. They opined that higher input costs, farm mechanisation and extensive Kisan Credit Card (KCC) coverage are the major reasons for the increase in agriculture credit. They said that demand for agricultural credit has increased significantly over the last decade compared with earlier years. They also said that this indicated the strong presence of banking networks in rural areas.
Proactive policy decisions
The officials explained that the proactive policy decisions by the central and state governments in the agriculture sector were a major reason for the increase in agricultural credit disbursement. The governments’ higher lending targets are pushing the banks to scale up the disbursement of loans year after year.
As per the Guidelines on Priority Sector Lending (PSL) issued by Reserve Bank of India, all banks are mandated to allocate at least 18 per cent of their credit to agriculture. Of this, a sub-target of 10 per cent is prescribed for small and marginal farmers.
Apart from providing interest subvention on certain types of agriculture loans, the Union government has raised the limit for collateral-free short-term agricultural loans from Rs 1.6 lakh to Rs 2 lakh. Officials said that all these measures contributed to significant growth in agricultural credit.
Waiver promise by parties
Meanwhile, agricultural experts believe that high borrowing by farmers is also influenced by political factors. They explained that in states such as Telangana, with most political parties promising to waive crop loans before every Assembly election, farmers prefer to take loans from banks.
After the formation of the state, two Assembly elections were held in Telangana. In 2018, the BRS and Congress promised crop loan waivers. Again, during the 2023 Assembly elections, the Congress promised a crop loan waiver. After forming the government, the Congress waived crop loans totalling about `21,000 crore owed by farmers with loans of up to `2 lakh.
Agricultural experts said that the promises made by political parties also led to farmers availing themselves of agricultural loans, in some cases even when they did not need them.