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Credit Markets for Small Farms: Role for Institutional Innovations


  • Pillarisetti, Satish
  • Mehrotra, Nirupam


Indian agriculture is characterized by the predominance of smallholders. This paper seeks to examine the access of small holders to agriculture credit in the context of financial sector reforms in India in the nineties. It explores the role of institutional and non institutional agencies in extending agriculture credit to the smallholder and the ground realities as revealed by recent data sets. The nineties also saw the unfolding of the largest microfinance programme in the world in India. While this was very successful in bringing micro enterprises under the credit purview, it was unable to cater to the need for agriculture credit. This paper examines the reasons for this and suggests that newer kinds of institutional innovations in the Pilot stage like, Joint Liability Groups, VDC- Farmers Club Model, SHG-Contract Farming Linkage model which seek to overcome the difficulties faced by smallholders in accessing agriculture credit are effective. They need to be upscaled and mainstreamed in order to bring about vibrancy in the rural credit market in India.

Suggested Citation

  • Pillarisetti, Satish & Mehrotra, Nirupam, 2009. "Credit Markets for Small Farms: Role for Institutional Innovations," 111th Seminar, June 26-27, 2009, Canterbury, UK 52858, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa111:52858

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    References listed on IDEAS

    1. Christoph R. Weiss, 1999. "Farm Growth and Survival: Econometric Evidence for Individual Farms in Upper Austria," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 103-116.
    2. Jean-Pierre Butault & Nathalie Delame, 2005. "Concentration de la production agricole et croissance des exploitations," Économie et Statistique, Programme National Persée, vol. 390(1), pages 47-64.
    3. Janvry, Alain de & Sadoulet, Elisabeth, 2001. "Income Strategies Among Rural Households in Mexico: The Role of Off-farm Activities," World Development, Elsevier, vol. 29(3), pages 467-480, March.
    4. Ayal Kimhi, 2000. "Is Part-Time Farming Really a Step in the Way Out of Agricultural?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 38-48.
    5. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    6. Hallam, David & Machado, Fernando, 1996. "Efficiency Analysis with Panel Data: A Study of Portuguese Dairy Farms," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(1), pages 79-93.
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    Cited by:

    1. Satyasai K J S & Sohan Premi, 2014. "Institutional Credit in Rainfed Areas: District Level Analysis in Southern States," Working Papers id:6164, eSocialSciences.

    More about this item


    Agriculture credit; Farm Size; Land Economics/Use; Q1; Q15;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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