Informal and vendor credit often escape official debt data. Examine what this means for agricultural credit policy in India, and suggest ways to improve how rural debt is measured.

Official debt figures mostly rely on what lenders report. As a result, loans from input dealers, equipment vendors and moneylenders go uncounted. Even the USDA admits that non-traditional equipment debt may be up to four times its official estimate [1]. In India, informal credit is far more common, so this blind spot affects credit policy itself and not just the statistics.

Implications for agricultural credit policy

• Partial picture of success: About ₹10.2 lakh crore is outstanding under KCC [2]. This covers only banks, RRBs and cooperatives. Household surveys show the fuller picture: 50.2% of agricultural households are indebted, with an average outstanding loan of ₹74,121 (SAS 2019) [3].
• Diversion hidden as "farm credit": The RBI Internal Working Group (2019) found that some states get farm credit far larger than their agricultural GDP, which points to diversion. Central, eastern and north-eastern states get very little [4]. Crop loans at an effective 4% under MISS [5] make diversion attractive.
• Mistargeted relief: Since 2014-15, states have announced loan waivers worth ₹2.4 lakh crore, and these cover only bank loans [4]. Farmers who owe moneylenders get nothing; moneylenders accounted for ₹257 of every ₹1,000 owed by farm households [6].
• Late warning of distress: When banks tighten lending, farmers turn to vendors [1]. So regulators can see less of the debt exactly when stress is rising.

Improving how rural debt is measured

• Survey more often: MoSPI could run a shorter, more frequent debt module between the full AIDIS/SAS rounds, which come years apart [3].
• Tag subsidised credit: Give crop loans only through KCC, as the IWG recommended [4], and use the Kisan Rin Portal [5] to track where subvention-backed credit ends up.
• Bring vendor credit into the data: Require NBFCs, microfinance lenders and dealer-finance arms to report farm loans to credit bureaus.
• Cross-check the numbers: Compare district-level credit with agricultural GDP to spot diversion and credit-starved regions [4].

The KCC and MISS have expanded formal credit, but policy based only on bank data will keep missing the most vulnerable farmers. Combining household surveys, digital credit trails and bureau reporting would give a true picture of rural debt. That picture is needed to move from waivers towards sustainable, inclusive farm finance, as the RBI Working Group urged [4], in line with SDG 1 and SDG 2.