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According to this study despite rapid urbanization, most third world economies remain rural, with agriculture being the dominant occupation. Non-farm enterprises and services have diminished due to the onslaught of urban industry and services. The rural economic structure is undergoing a steady change, with cropping patterns changing and yield levels increasing due to modern inputs like irrigation. This has led to an acceleration in the demand for credit, with timely and adequate provision of credit for modern agriculture becoming crucial. New institutional devices have been launched to augment the supply of credit, and as a result, even weaker sections of the population have better access to credit. With the emergence of formal credit delivery systems, the role of informal agencies is expected to decline. The study of the credit market, both formal and informal, is receiving greater attention now, especially in the context of poverty alleviation programs. The size of loans depends on variables like the size of the holding, cropping pattern, paid-out costs, and incidence of health and educational expenditures. The cost of credit is related not only to the source of credit but also to the network of product and factor market linkages. In summary, the rural economic structure in developing countries is changing, and the provision of credit for modern agriculture is a crucial component of the strategy for agricultural development. With the emergence of formal credit delivery systems, even weaker sections of the population have better access to credit, and the study of credit markets is receiving increased attention in the context of poverty alleviation programs.

Indian Council of Social Science Research.

English