Impact of Institutional Credit on Economic Status of Farm Households in Coimbatore District

Abstract

The small and marginal farmers accounted for 80 percent of the operational holdings and cultivated nearly 36 percent of the area in India. Due to their small holdings, they are not able to get adequate technology, capital and credit. The availability of credit to marginal and small farmers was not proportional to their operational land holding. The sub target lending of 8 percent net bank credit to the marginal and small farmers was not achieved by scheduled commercial banks in 2016. It implied that the credit need of marginal and small farmers was not completely fulfilled by the institutional credit. Moreover, the share of investment credit to total agricultural credit was declining from the year 2000 onwards. It was due to declining capital formation in agriculture. The major objective of the study was to analyse the impact of institutional credit on economic status of farm households at micro level. The institutional credit impact model was corrected for the problem of endogeneity based on two stage least square regression model. The results of the study showed that the farmers had availed credit from cooperative and commercial banks. Comparatively less safety of collateral assets was noticed in the borrowing of cooperative banks compared to commercial banks. The per hectare availability of credit was higher for marginal and small farmers. newlinei) Major objectives : newline1. To study the social, economic and demographic characteristics of the selected newlinefarm households. newline2. To examine the extent of farm credit availability among farm households and newlineto identify the factors determining formal credit availability newline3. To analyse the reasons for borrowing from different sources newline4. To measure the impact of institutional credit on economic status of farm newlinehouseholds newline5. To assess the problems in the availability of institutional credit for the newlineselected farm households. newlineii) Hypothesis: newline1. The marginal , small farmers did not differ significantly from that of the medium, large farmers in their social, economic and demographic profile