Factors Affecting Access to Agricultural Finance in India: An Empirical Validation from Farmers’ Perspectives

The paper is an attempt to study the factors affecting access to agricultural finance in the Peren district of Nagaland, India. Multi-stage purposive sampling technique was used to select the respondents based on criteria of financial inclusion and loan amount sanctioned. Peren district was selected purposively for the study based on a unique land-holding pattern ie., almost 90 percent of the area is privately owned. Two blocks viz, Jalukie and Athibung were selected purposively from the district under study considering their sphere in paddy production. A pre-tested structured questionnaire was used to collect the data relating to the perception of farmers from 10 villages taking 5 from each selected block. A total of 150 households (taking 15 from each village) that had accessed credit in the last one year were randomly selected. The exploratory factor analysis technique was used to retrieve the factors influencing access to agricultural finance on 20 items based on the literature review. The study retrieved 4 factors viz., institutional factor, procedural factor, infrastructural support factor, and farm-specific factor are the major determinants of agricultural finance. The findings of this research revealed that there is still a long way to go if the farmers are to access and utilize agricultural finance. The policy frameworks and reforms in the financial sector enable more outreach of the existing institutions to rural areas as well as the emergence of new players. There is a need to rethink the role of interventions in meeting the financial requirements of the farmers with a vision of self-confidence and sustained agriculture growth. In this connection, an efficient and operational financing scheme can be developed which will assist to reduce farmers’ constraints level arising from poor socio-economic shortages.