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Evaluating the Kisan Credit Card Scheme: Some Results for Bihar and India

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  • Areendam Chanda

Abstract

The Kisan Credit Card (KCC) scheme was introduced in India in 1998–1999 and has since become a flagship programme providing access to short-term credit in the agricultural sector. According to the Government of India, over a 100 million cards had been issued cumulatively by March 2011. Using data from 2005–2006 to 2009–2010, the article critically examines the determinants of KCC lending across states in India and districts in Bihar. We also examine the effects of the scheme on agricultural growth and yields. Our results suggest that states with initially better access to agricultural credit show subsequently greater amounts of KCC lending. However, Bihar and other BIMARU states also show faster adoption rates that cannot be explained by their recent growth accelerations. Within Bihar, we see that districts with initially greater lending in KCC continue to pull further away from other districts, while in terms of account holders there is evidence of convergence. Finally, we do not see any evidence of KCC lending on state- or district-level agricultural productivity. JEL: Q14, Q0, O41, O47

Suggested Citation

  • Areendam Chanda, 2020. "Evaluating the Kisan Credit Card Scheme: Some Results for Bihar and India," Arthaniti: Journal of Economic Theory and Practice, , vol. 19(1), pages 68-107, June.
    • Handle: RePEc:sae:artjou:v:19:y:2020:i:1:p:68-107
    DOI: 10.1177/0976747919872353
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    2. Emma Karki & Akriti Sharma & Brendan Brown, 2022. "Farm mechanisation in Nepal's Terai Region: Policy context, drivers and options," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(2), pages 287-305, March.

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    More about this item

    Keywords

    Agricultural growth; financial markets; short-term credit; India; Bihar;
    All these keywords.

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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