Determinants of Agricultural Credit Constraint—A Micro Level Analysis
No Thumbnail Available
Date
2010
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
In India, commercial banks, co-operative and Regional Rural banks
were the main conduit for providing agriculture credit. Though the total
agricultural credit of institutional agencies liad increased from Rs.885 crore
in 1970-1971 to Rs.1,25,309 crore in 2004-2005, till the year 2003-2004, the
private sector and public sector commercial banks did not achieve the target
lending (18 percent net bank credit) to the agricultural sector fixed by the
Reserve Bank of India. Around 60 percent of the working capital of tlie farmers
was not financed by tlie financial institutions and remained as institutional
credit gap. Tlie above facts brought out the presence of institutional credit
gap in the agricultural .sector lending and substantiated for disequilibrium
credit market condition in agriculture (National Accounts Statistics, 2006).
The studies in India on the extent of credit constraint and the impact of
agricultural credit on agricultural sector in a disequilibrium market condition
are very limited (Kochar, 1997). Hence the major objective of the present
study is to analyse the extent of credit constraint and the factors determining
credit constraint.
To conclude, in the study area, the area under cultivation (except in
Karamadai block) and farmers’ own fund to invest, turned out to be the significant
factors to determine probability of credit constraint. The co-efficient
of farmers’ own fund had consistent negative sign. It revealed that the probability
of credit constraint had declined with increase in the amount of farmers’
own fund to invest.