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
Tandon and Dhondyal (1962):
Tandon and Dhondyal (1962) defined agricultural. finance “as a branch of agricultural economics, which deals with and financial resources related to individual farm units.”
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.”
Nature and Scope of Agricultural Finance
Agricultural finance can be dealt at both micro level and macro level.
Macro finance
- Macro finance 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.
- 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.
Micro-finance
- Micro-finance refers to financial management of the individual farm business units.
- 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.
