Effects of Institutional Agricultural Credit on Agriculture of in India

Abstract

This study examined the nature of relationship between institutional agricultural credit and agricultural gross value added in India, using the time series data covering the period from 2011-12 to 2021-22. The study used the Ordinary Least Square (OLS) estimation technique to assess the effect of institutional credit on agricultural output in India. The findings from the investigation suggest that over this period, all selected independent variables significantly and positively impacted the agricultural output. But all other things remain constant; individually, a 10 percent increase in institutional production (short term) credit and medium-term/long-term credit led to the rise of 4.5 percent and 1.1 percent in the agricultural output, respectively. Thus, institutional credit seems to be an effective tool for agricultural growth, but its effectiveness is weakened by improper utilization and low productivity. Further results showed that the government expenditure on agriculture positively and significantly affected the agricultural output by 1.9 percent.