Delivery and Transaction Costs of Agricultural Credit in Central Dry Zone of Karnataka

Abstract

A broad vision for dryland agriculture would involve reducing poverty, hunger, and malnutrition and ensuring sustainable livelihoods for everyone. This vision can be achieved through a multi-pronged strategy to accelerate the pace of development of dryland agriculture, which requires synergies among innovative policies, appropriate institutional arrangements, market-driven technologies, input supplies and credit to benefit the dryland poor farmer. Multistage random sampling procedure was adopted to evaluate the objectives of the study. The Central dry zone (CDZ) of Karnataka was purposively selected for the study. From the zone, five taluks were chosen randomly. From each taluk, two villages were selected randomly. From each village, 10 farm households were chosen randomly. Descriptive statistics tools such as average, percent, ratio etc. were used to process the data for drawing meaningful conclusion. The study has revealed that borrowed amount, outstanding amount, interest rate and other transaction cost were highest in the case of long-term loans. Commercial banks were the leading institution with respect to all types credit disbursement in the study area, but share of cooperatives to the total crop or short-term loan disbursed in overall study area was highest (40percent) followed by regional rural banks and commercial banks (27.5 and 22.5percent, respectively). Further, about 85.94 percent of farmer-borrowers opined that the loan availed by them was adequate for the purpose, 89.06 percent expressed timely availability and easy accessibility of the loans, whereas 82.81 percent of them opined that the loan was availed at reasonable transaction cost. Necessary steps have to be taken by credit institutions in the form of special lending programmes for extending financial support to resource-poor dryland farmers in adopting improved technologies and thereby achieving better livelihood.