Abstract
This paper examines the state-wise differential effect of credit on agriculture, industries and the services sector of the Indian economy using panel regression approach and data sets panelled over 15 of the largest states for a period ranging between 2001 and 2010. The Least Square Dummy Variable (LSDV) estimation approach is employed to capture the state-wise effect of credit on sectoral output. The results of the study reveal that credit has a statistically significant and positive effect on the output of agriculture, industry and services sector of the economy. The results further reveal that in the agricultural sector, irrigation intensity has a significant and positive effect on output. With regard to the industrial sector, the number of workers and working capital are found to have significant and positive impact on output.
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