In 2021, India's agriculture sector had the highest number of employees recorded at around 152 million. Despite the impact of the pandemic, the sector saw an upswing in its employment trend. With such numbers, it is easy to conclude that agriculture is, undoubtedly, one of the primary employers of the country and contributes significantly to the economy. But the challenge in rural India is that 84% of farmers have small and marginal holdings of less than five acres. They are the most disadvantaged group because access to quality production and finance has become difficult due to the widespread distribution and fragmentation of land holdings. Furthermore farmers continue to be plagued by issues including bad finance, dysfunctional markets, inferior farm inputs, and a lack of assistance for improving crop yields.

Fortunately, the introduction of technology and digital adoption is transforming agriculture, with the financial sector playing a big role. One of the fastest-growing Fintech markets worldwide is in India. Market size for the sector was estimated to be $50 billion in 2021, and by 2025, it is expected to increase to around $150 billion.

With a combination of smart data intervention, partnerships, market linkages, and a phygital strategy, NBFCs and agritechs have proved that lending to farmers, value chain participants, and FPOs can be executed at scale. Many established agritech firms focus on post-harvest, agri input, and data-centric models. They have also included financing and credit services as their core offering. Moreover, many agritech players have developed unique models and algorithms in agri-fintech and agri-insuretech.

Finance in agriculture is as vital as other inputs being used in agricultural production. A farmer can invest in technical inputs only if funds are available. But a farmer's income isn't sufficient, and there is a constant need for outside finance or credit.

WHO NEEDS FINANCE IN THE AGRICULTURE SECTOR?

• To purchase agri inputs, equipment, invest in farming technologies, and sell their produce to food companies, farmers require loans and credit. 

• Working capital is needed by wholesalers or small agricultural business owners who operate out of APMC markets in order to manage enormous amounts of product, enhance storage, and deliver items to retailers. 

• To build irrigation systems, rural roads, bridges, rails, health centres, and markets, rural infrastructure companies need funding. 

• To advance agricultural technologies, the research and development division must make a financial investment in order to learn about straightforward, scalable, and cost-effective next-generation solutions.