Agricultural Credit In India Research Articles

AGRICULTURE CREDIT AND THE ROLE OF KISAN CREDIT CARD (KCC) IN INDIA

This research paper presents a comprehensive analysis of agricultural credit in India, focusing on the transformative role of the Kisan Credit Card (KCC) scheme in empowering farmers. Through a review of literature and an examination of pertinent data from various government reports and international organizations, this study evaluates the evolution of agricultural credit, assesses the trends in credit disbursement, and explores the significant impact of the KCC on agricultural productivity, rural development, and financial inclusion. The analysis showcases the KCC's contribution in facilitating timely credit access, reducing dependency on informal credit sources, and enhancing financial accessibility for farmers across different banking institutions. Furthermore, this paper discusses policy implications and recommendations to augment the effectiveness of KCC and agricultural credit schemes in meeting the evolving needs of farmers and fostering sustainable agricultural growth. The insights drawn from this research aim to provide a nuanced understanding of agricultural credit dynamics and underscore the pivotal role of KCC in enhancing the livelihoods of Indian farmers. KEYWORDS: Agricultural credit, Kisan Credit Card (KCC), financial inclusion, rural development, farmers' empowerment, policy recommendations, sustainable agriculture

Agricultural credit in India: determinants and effects

Agricultural credit in India: determinants and effects

What Determines the Availability of Formal Agricultural Bank Credit in Rural India? A Macro Perspective

The central organising theme of this paper is the study of the factors that determine the availability of formal agricultural credit to rural households in India for the period 1991-92 to 2018-19. Grounded in economic theory, this work proposes a model of the determinants of the availability and access to formal agricultural bank credit in India by accounting for both the underlying demand and supply functions of the aggregate formal credit market of Indian agriculture. The study uses an Ordinary Least Squares framework to analyse the issue under consideration while carefully framing the estimated model in terms of the underlying theory, its econometric properties and the policy robustness of estimated results. The study finds that active policy interventions on the demand side of the agricultural credit market in India are the urgent need of the hour if the objectives of financial inclusion and inclusive development are to be achieved in spirit and action. This is the case because the availability of formal bank credit to agricultural borrowers is found to be largely driven by factors that directly affect the demand for credit rather than its supply. With an already well-regulated allocation and distribution environment for agricultural credit in India, it is now the demand-side forces that require active policy disruptions and innovations.

Impact Analysis of Institutional Credit on the Agricultural Output in India

This paper examined the major contribution of institutional credit for agriculture development after the green-revolution period in India. The total institutional credit for agriculture registered a significant growth rate at 8.74 per cent. However, credit from RRBs grew at the highest growth rate at around 14 per cent in the last 50 years. The results showed that the share of Scheduled Commercial Banks had emerged as the dominant source of agricultural credit in India. In contrast, the share of commercial banks in the total credit declined over the period. The result of the regression model also showed that the overall institutional credit for agricultural and other institutional sources of agricultural credit (cooperatives, RRBs, and SCBs) was statistically significant for the overall agricultural output growth in India.

Disparity of agricultural credit in India: field data evidence from farmers across social groups

PurposeThis work aims to examine the access and disparity of institutional agricultural credit for small and marginal farmers across various social groups from three Indian states.Design/methodology/approachField data on socio economic variables were collected using multi-stage stratified random sampling and purposive sampling through a structured questionnaire by interviewing about 400 cross sectional small and marginal farmers belonging to various social groups such as general caste, other backward caste, scheduled castes and scheduled tribes. Disparity of agricultural credit across different social groups is assessed using measures such as credit access, credit adequacy ratio, credit gap and newly constructed Agriculture Credit Disparity Index (ACDI).FindingsThe credit access, credit access ratio and newly constructed ACDI suggest that, by and large, farmers belonging to socially advantaged groups have better access to institutional agricultural assistance than farmers belonging to socially disadvantaged groups.Practical implicationsThe agricultural credit policy of the government needs to incorporate measures to eliminate credit disparity primarily by correcting the poor socio-economic profile (especially lower asset ownership and higher illiteracy) of socially disadvantaged farmers compared to the farmers' counterparts.Originality/valueThis study contributes to the existing work by providing fresh evidence from the field across social groups for both kharif and rabi crops using recent survey data from small and marginal farmers which have important policy implications.

Role and Trend of Agricultural Finance Institutions in the Inclusive Growth of Farmers in Rural India

Purpose: The study is to evaluate the development of agricultural credit in India, exploration of the agricultural development and also to examine the various policies implemented by the Government of India. The paper emphasizes on the development in agriculture finances, new methods, techniques and technologies with a focus on how they lead to improved agricultural growth and greater financial inclusion. Design/Methodology/Approach: The study is grounded on secondary data compiled from different journals, web sites and related information from newspapers, annual reports of NABARD and RBI. Findings: The study has discovered that, informal credit has decreased as a percentage of total debt, while institutional credit to agriculture has exaggerated over time as a result of institutional agencies volunteering into rural areas, nationalization of foremost commercial banks and the establishment of regional rural banks through Reserve Bank of India initiatives. Originality/Value: This study is unusual in that it attempts to trace the agricultural financial institution in India, as well as the numerous agricultural policies that have been enacted as a result of agricultural finance. Paper Type: Case Study

Impact of Banking Sector Reforms on Agriculture and Sources of Agricultural Credit

Agriculture industry plays an important role in the Indian economy and Banks can play an important role in bringing agricultural revolution, in removing indifference of wealth. Utilization of high technology and modern equipment in agriculture brings about production growth. Indian economy is emerging as one of the leading economies of the world which makes progress of agriculture sector very crucial. In an economy like India where agriculture is subsistence, Finance is considered as the basic ingredient for increase in agricultural productivity. Therefore, it becomes the main responsibility of the country is to provide strong support to this sector. Though impressive significant strides have been achieved in terms of spread network and outreach of institutions, the qualities of flow of financial resources to agriculture continue to be inadequate. The growth of agricultural credit in India depends mainly on Government intervention. Banking sector reforms directly affected the agricultural sector. This paper describes the effects of various banking sector reforms on agriculture and sources of agriculture credit.

Individual risk propensity and agri-entrepreneurial financing effectiveness: strategy for sustainable agri-financing

The purpose of this paper is to evaluate sustainable effectiveness of agri-financing. An attempt has been made to evaluate individual through risk propensity domains and agri-financing through effectiveness domains. The study identifies prominent predictor of agri-financing effectiveness. The data have been collected through stratified random sampling from 220 beneficiaries who have availed agri-financing in the state of Jammu and Kashmir (India). Structural Equation Modelling approach was employed for instrument developments (i.e. confirmatory factor analysis) and hypothesis testing. It has been found that agri entrepreneurs are risk averse with lower risk propensity in career and finance domains. The results provide evidence that risk propensity dimensions have positive impact on agri-financing effectiveness. The study helps in evaluation, prediction and prevention of probable consequences of agri-financing. The research has significant implications in preventing the economic loss resulted through the failure of agri business schemes. Little research has been conducted on the area of agricultural credit in India which is inevitably revealed from the increasing agri farmer suicides.

English

English

The productivity of agricultural credit in India

AbstractThis study examines the nature of the relationship between formal agricultural credit and agricultural Gross Domestic Product (GDP) in India, specifically the role of the former in supporting agricultural growth, using state level panel data covering the period 1995–1996 to 2011–2012. The study uses a mediation analysis framework to map the pathways through which institutional credit relates to agricultural GDP relying on a control function approach to tackle the problem of endogeneity. The findings from the analysis suggest that over this period, all the inputs are highly responsive to an increase in institutional credit to agriculture. A 10% increase in credit flow in nominal terms leads to an increase by 1.7% in fertilizers (N, P, K) consumption in physical quantities, 5.1% increase in the tonnes of pesticides, 10.8% increase in tractor purchases. Overall, it seems quite clear that input use is sensitive to credit flow, whereas GDP of agriculture is not. Credit seems therefore to be an enabling input, but one whose effectiveness is undermined by low technical efficiency and productivity.

Agricultural Credit in India in the 2000s: Growth, Distribution and Linkages with Productivity

The period of the 2000s witnessed a sharp revival in agricultural credit in India that was largely policy induced. There were emerging shifts in institutional, functional and regional distributions of agricultural credit during the decade. This study attempts to explore the relationship between agricultural credit and agricultural production/productivity. The state-level panel model attempted in this article suggests a positive impact of the intensity of agricultural credit on total factor productivity in agriculture. The impact was relatively stronger with respect to direct agricultural credit. A case study of the (combined) state of Andhra Pradesh also suggests a positive association between agricultural credit and agricultural production. The study lends credence to the policy approach of including agriculture, the largest employer in the Indian economy, as a sector for priority credit in India. It also highlights the point that the sector deserves continued policy support in order to move onto a sustainable and higher growth path. JEL Classification: Q10, Q14, Q18, N55

Agricultural Credit in India – Innovations in Design and Delivery of Products and Services

The concept of bringing farmers together in a voluntary group was initiated in 1982 through the Farmers’ Club Programme. This institutional innovation has received a renewed focus from 2007–08 onwards. Nevertheless, access to farm credit sector has not been easy and adequate. In this paper, innovative approaches to improve agricultural credit flow have been captured from the secondary sources and analysed using compound annual growth rate and descriptive analytical tools. The share of private moneylenders has decreased with the institutional agencies making inroads into the rural scene. The structure of the sources of credit has witnessed a clear shift wherein the scheduled commercial banks and RRBs have emerged as the major sources of direct and indirect institutional credit to agriculture in recent years. The SHG-bank linkage programme, Kisan Credit Card, Farmers Clubs, Joint Liability Groups and Interest Subvention Scheme have been promoted to supplement rural credit delivery effectively and have also shown a significantly increasing growth rates over the years. In addition, there are a number of other small innovations that have taken place across the spectrum of agricultural credit markets. All these would eventually contribute to making sustainable access to agricultural finance leading towards a path for prosperity of farming community, especially the small and vulnerable farm households.

An Impact of Government's Agricultural Debt Waiver and Debt Relief (ADWDR) Scheme

In the Union Budget 2008–09, the Government of India announced a scheme of Agricultural Debt Waiver and Debt Relief Scheme (ADWDR-2008) for farmers. The total value of overdue loans being waived estimated at Rs. 50,000 crores and a one-time settlement (OTS) relief on the overdue loans at Rs. 10,000 crores for implementation by all scheduled commercial banks, besides RRBs and Cooperative credit institutions. The focus of this study was to assess the distribution of benefit of ADWDR scheme to farming community in India and to examine the impact on supply of agricultural credit in India by the banks. This study was based on information gathered through secondary sources. The compound growth rate was used for the analysis of data. The study found a) benefit amongst various regions was distributed disproportionately b) Credit disbursement to agricultural sector declined and c) Credit supply to the agricultural sector in terms of number of account holders and amount financed has taken reverse trends.

Does Access to Formal Agricultural Credit Depend on Caste?

Summary This paper analyzes whether caste impedes access to formal agricultural credit in India. Credit is provided mainly through cooperative and commercial banks. Using national data, we find that cooperative banks discriminate against lower caste borrowers, and find weak evidence that commercial banks instead bias lending in their favor in accordance with affirmative action policies. We compare the organizational structures of the two types of bank, and explain discrimination by cooperative banks in terms of interest group capture at the district level by showing that discrimination takes place in those districts where higher castes dominate.

Fixing Market Failures or Fixing Elections? Agricultural Credit in India

This paper integrates theories of political budget cycles with theories of tactical electoral redistribution to test for political capture in a novel way. Studying banks in India, I find that government-owned bank lending tracks the electoral cycle, with agricultural credit increasing by 5–10 percentage points in an election year. There is significant cross-sectional targeting, with large increases in districts in which the election is particularly close. This targeting does not occur in nonelection years or in private bank lending. I show capture is costly: elections affect loan repayment, and election-year credit booms do not measurably affect agricultural output. (JEL D72, O13, O17, Q14, Q18)

Fixing Market Failures or Fixing Elections? Agricultural Credit in India

This paper integrates theories of political budget cycles with theories of tactical electoral redistribution to test for political capture in a novel way. Studying banks in India, I find that government-owned bank lending tracks the electoral cycle, with agricultural credit increasing by 5-10 percentage points in an election year. There is significant cross-sectional targeting, with large increases in districts in which the election is particularly close. This targeting does not occur in non-election years, or in private bank lending. I show capture is costly: elections affect loan repayment, and election year credit booms do not measurably affect agricultural output.

Agricultural Finance in India: Experience and Lessons

The Paper traces the evaluation of agricultural credit in India. The first attempt at institutional changes in agriculture saw the establishment of special funds under the RBI and formation of co-operative credit societies. Then came nationalisation of commercial banks and concepts of priority sector lending. Targeted lending along with subsidized interest rate charged by the NABARD characterised this phase. Institutional framework undergoes a dramatic change since the nineties when decentralization occupies the centre stage. Micro credit societies and SHG-bank tie up assume the role of feeder canals of finance in agriculture.