New Delhi, August 10 | Aranya Singh: Bank lending to the agriculture and allied sectors has grown at a compound annual growth rate (CAGR) of 12.7% over the past five years, with the rise in agricultural credit having a significant impact on rural spending, particularly on tractors and two-wheelers, the government said on Monday.

Minister of State for Finance Pankaj Chaudhary made the statement in a written reply to Trinamool Congress MP Mahua Moitra during the ongoing Monsoon Session of Parliament.

Moitra had sought details on the growth of bank credit disbursed to the agriculture and allied sectors in rural areas during each of the last five financial years, as well as the growth in retail sales of tractors and two-wheelers in rural markets over the same period.

Citing the Reserve Bank of India’s July 2026 Bulletin, the government said domestic demand received a sharp boost from rural demand in June 2026. Tractor and two-wheeler sales recorded robust growth amid the commencement of kharif sowing activities.

According to RBI data, tractor sales in the rural economy rose to 10.6 lakh units in 2025-26, from 7.7 lakh units in 2021-22, registering a CAGR of 8.3%. Tractor sales also jumped 23% in 2025-26 compared with the previous financial year.

According to data released by the Federation of Automobile Dealers Associations (FADA), the apex national body representing the automobile retail industry, India’s tractor market recorded robust growth in July 2026, with retail sales rising 28 per cent year-on-year to 1,17,349 units, up from 91,604 units in July 2025.

Rural two-wheeler sales also increased to 197.3 lakh units in 2025-26, from 123.7 lakh units in 2021-22, translating into a CAGR of 12.4%. Sales grew by 10% in 2025-26 over 2024-25.

The data indicates that stronger agricultural credit flows have coincided with a sustained improvement in rural consumption, with demand for farm equipment and personal mobility emerging as key indicators of the rural economy’s recovery and expansion.
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