Interest Subvention for Crop Loans in India: Win-Win or Win-Lose

Bhanot, Disha; Farias, Vivek F.; Sinha, Deeksha

doi:10.2139/ssrn.3846070

Cited by 3 publications

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“…This result is consistent with some previous studies conducted on this topic. Bhanot et al (2021) found that the number of new loans from banks increased by 35.28% after the introduction of the Interest subvention scheme. In our analysis, we found a similar reduction of around 35% in the informal borrowings by the households due to the ISS.…”

Section: Resultsmentioning

confidence: 99%

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Impact of interest subvention scheme (ISS) on the behaviour of farm households: a case of Andhra Pradesh and Madhya Pradesh

Sehgal

2023

AFR

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PurposeCredit is an essential element in the production process in agriculture. There are two sources from which farm households can access credit: institutional sources and non-institutional or informal sources of credit. The informal sources of credit, such as moneylenders, charge exorbitant rates of interest, which further puts a financial burden on the farmers. Hence, to increase the flow of credit from institutional sources, a policy known as the interest subvention scheme (ISS) was introduced in the year 2006. This paper aims to find the effect of the ISS on the behaviour of farm households.Design/methodology/approachThe author has used difference-in-difference analysis for estimation. In the analysis, the author has taken Madhya Pradesh as the treatment state and Andhra Pradesh as the controlled state. The author has used the Village Dynamics in South Asia (VDSA) dataset of ICRISAT for analysis. The author has used data from 2009 to 2014 for the two states.FindingsThe author has found that the difference between the average interest rate of Andhra Pradesh and Madhya Pradesh is significant for both pre-treatment and post-treatment periods and this gap has increased after the intervention period. The results suggest that the share of informal sector borrowings has reduced in the treatment group (Madhya Pradesh) as compared to the control group (Andhra Pradesh) in the post-treatment period.Originality/valueThis paper is particularly important because of the dearth of literature on the impact of this scheme in India and may shed light on the much-needed policy implications of this particular policy.

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Section: Resultsmentioning

confidence: 99%

“…This result is consistent with some previous studies conducted on this topic. Bhanot et al . (2021) found that the number of new loans from banks increased by 35.28% after the introduction of the Interest subvention scheme.…”

Section: Resultsmentioning

confidence: 99%

Impact of interest subvention scheme (ISS) on the behaviour of farm households: a case of Andhra Pradesh and Madhya Pradesh

Sehgal

2023

AFR

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“…Using secondary data, Kane (1981), Buttari (1995), and so on analyzed the impact of interest rate subsidies. Maity andSahu (2020), Bhanott, Faris, andSinha (2021), and so on, found positive impacts of interest rate subsidies. However, Kane (1981), Buttari (1995), Velde and Warner (2007), and so on, found negative impact of such programs in respective countries.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Buttari (1995) found that subsidized credit missed its target, i.e., poor and small industries. However, Maily and Sahu (2020), Bhanot, Farias, and Sinha (2021), and Kharel (2022) found positive impacts of subsidy programs that increased the volume and participation of people in the targeted programs.…”

Section: Introductionmentioning

confidence: 99%

Changing Structure of Concessional Loan in Nepal

Gautam

2023

J. Interdis. Stud.

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This article highlights the changing scenario of concessional loan in Nepal. It examines the policies, trends, and structural shifts within the country’s financial framework. A concessional loan is a crucial tool for the economic development of Nepal. It aimed at promoting economic efficiency and equitable distribution of income throughout the country. Using secondary data from FY 2017/18 to FY 2021/22, this study evaluates the trend and structure of concessional loan in Nepal. The findings reveal that there is a significant surge in both the volume of concessional loan and the number of borrowers across different headings of concessional loan. Particularly, the number of borrowers of Women entrepreneurship loan are remarkably increased in the recent years. However, the concentration of loan among larger borrowers and the misappropriation of funds raises concerns regarding the program’s effectiveness. Furthermore, the commercial banks play a dominant role in disbursing concessional loan. Agricultural Development Bank Limited is a key contributor, aligning with the government’s focus on promoting the agricultural sector. This study recommended a call for a comprehensive evaluation of the concessional loan program. The reevaluation of the program could be crucial to fine-tune the policies, address challenges, and focus the program toward its goals of enhancing productivity, promoting financial inclusion, and fostering equal distribution income distribution in Nepal.

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“…China has written off $3.4 billion and restructured $15 billion of debt between 2000 and 2019. Recently, China has announced that it is forgiving 23 interest-free loans for 17 African nations, while pledging to deepen collaboration with the Continent (Norton, 2022).…”

Section: China's International Policies the Bri Principles And Curren...mentioning

confidence: 99%

The Belt and Road Initiative in Nepal: Potential impacts and implications

Prasai

2023

Human Geography

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The Belt and Road Initiative is emerging as a global phenomenon with a potential of bearing on almost all nations on Earth in different ways. In this context, this article, generally, is an attempt to demonstrate that impacts and implications of the BRI in Nepal will be governed by important national (Chinese) and international factors. Specifically, it argues that factors that have high developmental potential for Nepal include China's persistent rise and concomitant creation of the multipolar world, China's upholding of its international polices and the BRI principles, reproduction of the BRI experiences of other countries in Nepal, China's continuous pursuit of its socialism-aspiring path of development, its potential embarkment on a predominantly socialist path in the future. It argues that China’s future embarkment on a predominantly capitalist path can have ambivalent impacts ranging from highly appropriative to highly supportive. Likewise, the US–China conflict can also have ambivalent impacts ranging from boosting of Nepal’s negotiating power between the two powers to compromising of Nepal’s sovereignty and stability. The US–China conflict can also push China to treat Nepal as strategically highly important and, therefore, as a favored nation, pouring massive investments. It shows that the Chinese investment will enhance Nepal’s status vis-a-vis the US, the EU and India by cutting down its age-long dependencies on them; and will be conducive to the geographically-distributed development and capital accumulation.

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Interest Subvention for Crop Loans in India: Win-Win or Win-Lose

Cited by 3 publications

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Impact of interest subvention scheme (ISS) on the behaviour of farm households: a case of Andhra Pradesh and Madhya Pradesh

Impact of interest subvention scheme (ISS) on the behaviour of farm households: a case of Andhra Pradesh and Madhya Pradesh

Changing Structure of Concessional Loan in Nepal

The Belt and Road Initiative in Nepal: Potential impacts and implications

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