The Mint newspaper, India’s Wall Street Journal affiliate, published a piece by Russell Green, the institute’s Will Clayton Fellow in International Economics, today on India’s directed lending program. Since the 1970s India has set a mandatory target for its domestic banks to lend to certain “priority sectors” including agriculture and small and medium-sized enterprises. The targets have become more ambitious over time, despite slow growth in the agriculture sector. Banks now struggle to meet the targets without jeopardizing their own standards for lending quality. Green criticizes the recent expansion of agricultural lending targets to foreign banks, and suggests ways the program could be improved.
- Read “The big problem of agricultural loans” in the Aug. 13, 2012, edition of the Mint.