Abstract
The study has analysed the changes in the structure of rural credit delivery and inclusiveness of rural credit flow across states and social groups, along with identification of factors that influence the choice of credit source. Also, the impact of access to institutional credit was examined on farmers’ welfare. The study is based on the unit-level data of Debt and Investment Survey carried out by NSSO during 1992 (48th round), 2003 (59th round), 2013 (70th round) and Situation Assessment Survey of Agricultural Households (70th round). The study has found that the structure of credit market has changed overtime and the share of institutional credit has increased. The initiatives taken by the government have paid off, and the flow of institutional credit to rural areas has increased significantly even in real terms. The indicators of financial inclusion have shown a sign of improvement. However, regional disparity and presence of informal agencies in the disbursement of rural credit are still persistent. Rural households’ access to institutional credit is influenced by a number of socio-economic, institutional and policy factors. In our analysis, the education, caste affiliation, gender and assets ownership have been found to influence the rural households’ access to institutional credit significantly. The access to institutional credit has been found to increase the agricultural household’s income substantially. A concerted effort and appropriate policy reform are required to make rural households’ access to institutional credit neutral to caste, class and regions.
Adapted from a paper published in Agricultural Economics Research Review, Vol. 28 (Conference Number) 2015. Page 151–166. DOI:10.5958/0974-0279.2015.00030.0.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The public sector banks, cooperative society banks, commercial banks and regional rural banks are the major institutional sources of credit.
- 2.
Private moneylenders, large landowners, traders, relatives and friends constitute the informal or non-institutional sources of credit.
References
Birthal PS, Joshi PK, Roy D, Thorat A (2013) Diversification in Indian agriculture towards high-value crops: The role of smallholders. Can J Agr Econ 61:61–91
Chand R, Prasanna PAL, Singh A (2011) Farm size and productivity: Understanding the strengths of smallholders and their livelihoods. Econ Polit Wkly 46(26/27):5–11
Conning J, Udry C (2007) Ruralfinancial markets in developing countries. Handbook of agricultural economics, Elsevier, Netherlands
Economic Survey (2014–2015) Ministry of Finance, Government of India, New Delhi
Guirkinger C (2008) Understanding the co-existence of formal and informal credit markets in Piura. Peru World Dev 36(8):1436–1452
Hoff K, Stieglitz JE (1990) Imperfect information and rural credit markets—puzzles and policy perspectives. World Bank Econ Rev 4(3):235–250
Kumar SM (2013) Does access to formal agricultural credit depend on caste? World Dev 43(3):315–328
Kumar A, Singh DK, Kumar P (2007) Performance of rural credit and factors affecting the choice of credit sources. Indian J Agr Econ 62(3):297–313
Kumar A, Singh KM, Sinha S (2010) Institutional credit to agriculture sector in India: Status, performance and determinants. Agr Econ Res Rev 23(2):253–264
Mahajan V, Ramola BG (1996) Financial services for the rural poor and women in India: Access and sustainability. J Int Dev 8(2):211–224
Robinson MR (2001) The micro finance revolution, sustainable finance for the poor. World Bank and Open Society Institute, Washington, DC
Reserve Bank of India (1954). All India Rural Credit Survey: Report of the Committee of Direction (Shri AD Gorwala-Chairman), RBI, Mumbai
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer Nature Singapore Pte Ltd.
About this chapter
Cite this chapter
Kumar, A. (2017). Dynamics of Access to Rural Credit in India: Patterns, Determinants and Implications. In: Bathla, S., Dubey, A. (eds) Changing Contours of Indian Agriculture. Springer, Singapore. https://doi.org/10.1007/978-981-10-6014-4_3
Download citation
DOI: https://doi.org/10.1007/978-981-10-6014-4_3
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-10-6013-7
Online ISBN: 978-981-10-6014-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)