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Institutional Credit to Agriculture Sector in India: Status, Performance and Determinants

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  • Kumar, Anjani
  • Singh, K.M.
  • Sinha, Shradhajali

Abstract

The institutional credit has been conceived to play a pivotal role in the agricultural development of India. A large number of institutional agencies are involved in the disbursement of credit to agriculture. However, the persistence of money lenders in the rural credit market is still a major concern. In this backdrop, the present study has examined the performance of agricultural credit flow and has identified the determinants of increased use of institutional credit at the farm household level in India. The study based on the secondary data compiled from several sources, has revealed that the institutional credit to agriculture in real terms has increased tremendously during the past four decades. The structure of credit outlets has witnessed a significant change and commercial banks have emerged as the major source of institutional credit in recent years. But, the declining share of investment credit in the total credit may constrain the sustainable agricultural growth. The quantum of institutional credit availed by the farming households is affected by a number of socio-demographic factors which include education, farm size, family size, caste, gender, occupation of household, etc. The study has suggested simplification of the procedure for a better access to agricultural credit of smallholders and less-educated/illiterate farmers.

Suggested Citation

  • Kumar, Anjani & Singh, K.M. & Sinha, Shradhajali, 2010. "Institutional Credit to Agriculture Sector in India: Status, Performance and Determinants," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 23(2), July.
    • Handle: RePEc:ags:aerrae:96935
    DOI: 10.22004/ag.econ.96935
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    References listed on IDEAS

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    1. Kumar, Anjani & Singh, Dhiraj K. & Kumar, Prabhat, 2007. "Performance of Rural Credit and Factors Affecting the Choice of Credit Sources," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 62(3), pages 1-17.
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    Cited by:

    1. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, P.K., 2017. "Institutional versus non-institutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey," Economic Systems, Elsevier, vol. 41(3), pages 420-432.
    2. Cariappa, A. G. Adeeth & Sendhil, R, 2021. "Does Institutional Credit Induce on-Farm Investments? Evidence from India," 2021 Conference, August 17-31, 2021, Virtual 315221, International Association of Agricultural Economists.
    3. saravanan, saravanan, 2016. "An Analysis of Institutional Credit, Agricultural Policy and Investment to Agriculture in India," MPRA Paper 72891, University Library of Munich, Germany.
    4. Johannes I. F. Henning & Dominique A. Bougard & Henry Jordaan & Nicolette Matthews, 2019. "Factors Affecting Successful Agricultural Loan Applications: The Case of a South African Credit Provider," Agriculture, MDPI, vol. 9(11), pages 1-15, November.
    5. Yusuf Ibrahim Kofarmata & Shri Dewi Applanaidu & Sallahuddin Hassan, 2016. "Determinants of Demand for Credit: A Conceptual Review," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(1), pages 6-10.
    6. Bina Agarwal, 2016. "Twelfth Plan Working Group on Disadvantaged Farmers, Including Women," Working Papers id:8474, eSocialSciences.
    7. Kumar, A. & Singh, R.K.P. & Jee, S. & Chand, S. & Tripathi, G. & Saroj, S., 2015. "Dynamics of Access to Rural Credit in India: Patterns and Determinants," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 28(Conferenc).
    8. Thi Kieu Van Tran & Ehsan Elahi & Liqin Zhang & Muhammad Abid & Quang Trung Pham & Thuy Duong Tran, 2018. "Gender differences in formal credit approaches: rural households in Vietnam," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 32(1), pages 131-138, May.
    9. Joseph Chisasa, 2016. "Determinants of the demand for credit by smallholder farmers: survey results from South Africa," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 9(1), pages 26-46.
    10. Kumar, Anjani & Yadav, Chitra & Jee, Shiv & Kumar, Sant & Chauhan, Sonia, 2011. "Financial Innovation in Indian Agricultural Credit Market: Progress and Performance of Kisan Credit Card," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 66(3), pages 1-11.
    11. Kundu, Amit & DAS, SANGITA, 2021. "Accessibility of Institutional Credit among the Agricultural Labour Households and its Impact on their Livelihood," MPRA Paper 112791, University Library of Munich, Germany, revised 03 Mar 2022.
    12. Tahir Mahmood & Noman Arshed, 2022. "Identifying the Demand-Based Financial Issues in the Agriculture Sector of Pakistan: A Qualitative Thematic Analysis," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 4(1), pages 26-37, March.
    13. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, Pramod Kumar, 2017. "Institutional versus noninstitutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey," IFPRI discussion papers 1614, International Food Policy Research Institute (IFPRI).
    14. Chisasa, Joseph, 2015. "Sources Of Growth In South African Sources Of Growth In South African Agriculture – A Corporate Finance Perspective," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 38(4).
    15. Hassan, Samir Ul & Khanday, Shafi Ahmad & Ahmad, Masroor & Mishra, Biswambhara & Rymbai, Motika Sinha, 2022. "A Historical Cum Empirical Overview of Agriculture Spending and Output Nexus in India," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 14(3), September.
    16. Thejeswini, R. & Kiresur, V.R. & Preeti, N.S. & Teggi, M.Y. & Trilokanatha, G.A., 2014. "Agricultural Credit in India – Innovations in Design and Delivery of Products and Services," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 27(Conferenc).
    17. Malek, Mohammad Abdul & Hossain, Md. Amzad & Saha, Ratnajit & Gatzweiler, Franz W., 2013. "Mapping marginality hotspots and agricultural potentials in Bangladesh," Working Papers 154065, University of Bonn, Center for Development Research (ZEF).
    18. Chisasa, Joseph, 2015. "Sources of Growth in South African Agriculture - A Corporate Finance Perspective," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 2015(35).

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    Agricultural and Food Policy;

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