Disparity of agricultural credit in India: field data evidence from farmers across social groups

Abstract

PurposeThis work aims to examine the access and disparity of institutional agricultural credit for small and marginal farmers across various social groups from three Indian states.Design/methodology/approachField data on socio economic variables were collected using multi-stage stratified random sampling and purposive sampling through a structured questionnaire by interviewing about 400 cross sectional small and marginal farmers belonging to various social groups such as general caste, other backward caste, scheduled castes and scheduled tribes. Disparity of agricultural credit across different social groups is assessed using measures such as credit access, credit adequacy ratio, credit gap and newly constructed Agriculture Credit Disparity Index (ACDI).FindingsThe credit access, credit access ratio and newly constructed ACDI suggest that, by and large, farmers belonging to socially advantaged groups have better access to institutional agricultural assistance than farmers belonging to socially disadvantaged groups.Practical implicationsThe agricultural credit policy of the government needs to incorporate measures to eliminate credit disparity primarily by correcting the poor socio-economic profile (especially lower asset ownership and higher illiteracy) of socially disadvantaged farmers compared to the farmers' counterparts.Originality/valueThis study contributes to the existing work by providing fresh evidence from the field across social groups for both kharif and rabi crops using recent survey data from small and marginal farmers which have important policy implications.

Addressing the Rural Lending Gap: A Comparative Analysis of Access to Credit for Urban and Rural Farmers in Odisha

“…Rural agricultural businesses are perceived as risky attempts due to the inherent hazards of agriculture, which are characterised by unpredictable weather and market volatility, which results in conservative lending practises and high interest rates. Rural agricultural businesses are perceived as riskier endeavours due to the inherent hazards of agriculture, which are characterised by unpredictable weather and market volatility, which results in conservative lending practises and high interest rates (Yadav and Rao, 2022). Rural farmers' limited financial literacy contributes to these issues by limiting their capacity to understand complicated financial services and conditions, which ultimately affects their creditworthiness.…”