Impact of institutional credit on agricultural production in Kerala

Abstract

The study on ‘Impact of institutional credit on agricultural production in Kerala’ has been undertaken with the objectives of assessing the source-wise and purpose-wise credit flow to agriculture; comparing the performance of various institutions in the provision of agricultural credit; examining the impact of institutional credit on agricultural production, and analysing the pattern of utilisation and impact of credit on farmers with respect to Pananchery Panchayat of Thrissur district. The study was based on both primary and secondary data. Major sources of data were, www.rbi.org.in, Agricultural Statistics at a Glance, Economic Review, and www.indiastat.com for the period 1984-85 to 2010-11 for India, and 1990-91 to 2010-11 for Kerala. Percentages, annual growth rates, compound annual growth rates (CAGR), ordinary line graphs, pie diagrams, Mann-Whitney U Test, correlation, simple and multiple linear regression, Cobb-Douglas model, Cochrane-Orcutt Regression model and Durbin-Watson d- Test were employed to analyse the data. Primary data have been collected from 60 farmers selected through stratified random sampling from Pananchery Panchayat of Thrissur district. The study has revealed that co-operatives are the major source of IC in India, and SCBs in Kerala, Thrissur and Pananchery Panchayat. Co-operatives are more interested to provide indirect loans in recent years. IC is mainly disbursed by way of short-term and production credit in India, Kerala and Pananchery. Simple and Multiple Linear Regression, Cobb-Douglas and Cochrane-Orcutt Regression models revealed that IC has significant and positive impact on agricultural production in India and Kerala. Cobb-Douglas model for the Pananchery Panchayat also pointed out the significant contribution of IC in agricultural production. As far as the problems of farmers of Pananchery Panchayat are concerned, availability of credit is not an important one. This might be one of the reasons for the high productivity compared to State average, in many of the crops cultivated in Pananchery, given the significance of institutional credit in agricultural production. The major problem related to IC as pointed out by them is the absence of initiatives and technically qualified staff for providing consultancy, bank related and marketing services to farmers from Krishibhavan, Panchayat and commodity boards. The farmers, especially illiterate are in dire need of qualified staff at Panchayat level for filling up of various forms and preparation of documents and proposals to be submitted to banks for financing, providing market intelligence services and making them competent to trade in futures markets in agricultural commodities so as to fetch reasonable prices for their products. The agricultural officers, according to the farmers are preoccupied with their routine functions. Hence it is suggested that the services of additional personnel competent to provide technical consultancy and guidance with respect to the financing and commodity market intelligence services may be provided to the farmers at the Panchayat level.