Credit is an important instrument of acquiring command over the use of working capital, fixed capital and consumption goods. In the wake of Green Revolution, land and labour have receded into the background as predominant factors of growth. Use of capital and adoption of modern techniques of production which have become major sources of growth of agricultural output necessitate access to credit markets for financing their use. Institutional sources of credit have become quite significant during the last few years. The rapid expansion of credit from institutional sources can be seen from various indicators. The total disbursement of agricultural loans has gone up from Rs. 306.75 million in 1972-73 to Rs. 5,102.14 million in 1981-82. On a per acre basis, the loans increased from Rs. 7.33 in 1972-73 to Rs. 106.83 in 1981-82. In this perspective, the disparities in income and wealth in rural areas would crucially depend on the distribution of capital among farms of different sizes and occupational groups. Neglecting equitable distribution of credit as a policy instrument for rural income redistribution may be a serious omission by the policy makers interested in an improvement of rural equity.