Agricultural credit in India has expanded steadily over the years, with official data showing a consistent increase in lending. In some states, the volume of agricultural loans is now almost equal to the value of crop production. Yet, despite this growth, farmers in many parts of the country—especially in eastern and northeastern India—continue to have limited access to institutional credit. This disparity reflects weaknesses in government lending schemes, shortcomings in the interest subvention mechanism, inadequate banking infrastructure, low farmer awareness, and administrative inefficiencies at the state level.

Successive governments have sought to expand institutional credit so that farmers can avoid costly informal borrowing and benefit from concessional finance. Agricultural credit is a critical component of farm production, enabling farmers to purchase quality inputs on time and improve productivity. Although several states have made significant progress, many others continue to lag behind. The Kisan Credit Card (KCC) scheme and the Modified Interest Subvention Scheme (MIS) have played a major role in improving access to affordable credit. However, their benefits remain unevenly distributed. While the number of KCC accounts has crossed 80 million, the average amount of institutional credit available per farmer remains low in most states.

In this issue of Rural World, experts examine the present status of agricultural credit and suggest reforms to make the system more inclusive. One major concern is the weakening network of Primary Agricultural Credit Societies (PACS), which has reduced farmers' access to formal finance. Many rural areas, particularly in eastern and northeastern India, also suffer from poor banking penetration, creating "banking dark zones" where farmers struggle to obtain institutional loans despite the existence of government schemes.

Administrative efficiency is another important factor. States with better-functioning revenue departments generally perform better in agricultural lending because farmers can obtain land records and other documents required by banks more quickly. States where institutional credit remains inadequate need to strengthen their administrative systems alongside expanding banking infrastructure.

Crop insurance is another area requiring urgent reform. Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), the Centre and state governments subsidise insurance premiums, while farmers pay the remaining share. Although the scheme has undergone several modifications, a fundamental issue remains unresolved.

Currently, crop insurance claims are assessed on the basis of a cluster, or "insurance unit", rather than an individual farmer's field. Crop insurance claims are paid only when crop losses across the insurance unit exceed a prescribed threshold. As a result, farmers whose fields suffer severe damage may receive little or no claim if the average loss across the cluster remains below the threshold. This has become one of the biggest sources of dissatisfaction among insured farmers.

With the availability of Farmer IDs, digitised land records, and satellite mapping, there is a strong case for shifting to field-level insurance assessment. If that is not immediately feasible, then premium assessment should also be aligned with the cluster-based approach. At present, farmers pay premiums based on their individual holdings, while claims are calculated at the cluster level. This inconsistency needs to be addressed. Rural World explores these issues in detail in its cover story on crop insurance.

This issue also features a special article on the Agricultural and Processed Food Products Export Development Authority (APEDA) and its efforts to diversify India's agricultural export basket by promoting value-added products, thereby increasing farmers' export earnings. Readers will also find an exclusive interview with APEDA Chairman Abhishek Dev on the future of India's agricultural exports.

The year ahead is likely to be challenging for Indian agriculture and the rural economy. The impact of El Niño, a weaker monsoon, and the possibility of lower kharif acreage could adversely affect agricultural production and rural incomes. In these circumstances, the government should consider a dedicated financial package for the agriculture sector, which supports nearly 46 per cent of India's workforce. A stronger agricultural sector is essential not only for farmers' livelihoods but also for sustaining the long-term resilience and growth of the Indian economy.