Assessing the Role of Credit on Agricultural Growth in Bihar

Abstract

Credit is an important factor that could influence the use of fixed and variable factors in the agriculture production system. A healthy credit system is responsible for the economy’s growth, which ensures that in lack of money, neither the supply nor the demand gets affected. The current study explores the role and status of credit to agriculture in Bihar. It assumes importance as the state has around 96 percent of marginal and small holdings and faces the vagaries of weather with recurrent floods, especially in the northern part of it. The study uses secondary data for the purpose of analyzing the growth of institutional credit flow in Bihar. Further, to analyze the credit delivery system in agriculture in Bihar, data from NSS 77th round survey (2021) is used. Results reveal the presence of institutional and non-institutional agencies in Bihar’s credit delivery system. The study also uses a multiple linear regression model to assess the role of credit in the agricultural growth of Bihar. The model reveals a significant positive relationship between agricultural production and credit which states the significance of credit to Bihar’s agricultural growth.