Factors Discriminating Credit Growth: A Comparison of Punjab and Kerala

Abstract

The role of credit in commercial agriculture is inimitable. The study examined the factors discriminating credit growth in Punjab and Kerala from1983-84 to 2011–12. The credit growth is highly influenced by factors like net irrigated area per 1000 hectare of net sown area and average size of operational holdings. The reason was the dependency of Punjab on credit for irrigation needscompared to a rain fedagriculture in Kerala. Moreover the smaller size of the operational land holding in Kerala limits tractorization or other forms of mechanization. The next important factors differentiating the credit growth in both the states were area under high yielding varieties and fertilizer consumption per 1000 hectares of net sown area which had a substantial impact on the inter-state credit growth variability. The high input intensive agriculture in Punjab due to the advent of green revolution could be the root cause. Other factors like GSDP at constant prices, per capita income and number of tractors per 1000 hectare of net sown area also discriminate the credit growth. The main reason for the difference in credit growth between the two states is the variation in the climatic conditions, land distribution and cropping pattern.