IMPACT OF INSTITUTIONAL CREDIT ON THE FARM ECONOMY – EMPIRICAL EVIDENCE FROM A STUDY IN KARNATAKA, INDIANagaraju Y., A. Sachindrababu, Nirmala S.R. and Megha Mallikarjun Doni
The present study was conducted to examine the effects of institutional credit on the cost, returns and profitability of farming in the Tumkur district of Karnataka State. Out of the sample of 120 respondents selected for study, sixty were borrowers of institutional credit during 2008-09 and the remaining sixty were the non-borrowers selected from the same area. Independent sample t-test was used to compare the production and income of beneficiaries with those of non-beneficiaries. The borrowing pattern showed that the per-farm amount of loan increased with increase in the size of holding. The analysis revealed that the income of beneficiary farm category was higher than that of non-beneficiaries. The per-acre production of beneficiaries with credit for paddy, ragi, groundnut, pigeonpea, arecanut and coconut was more compared to the non-beneficiaries and there was a significant difference in yields except coconut yield. The cost and return structure of major crops, viz, paddy and ragi revealed that the total cost of cultivation was to Rs.12045.11 and 11715.84 per acre respectively on borrower farms compared to Rs. 9991.4 and 10056.44 per acre on non-borrowers farms. The net returns derived from paddy and groundnut were Rs. 16,124.33 and Rs. 14,809.88 (on borrower farms) and Rs.11,132.22 and Rs. 8,771.34 (on non-borrower farms), respectively. The results have clearly demonstrated that agricultural credit has positive impact on the per acre yield of crops under study and also on farmersâ income. Thus the flow of institutional credit has resulted in improving the economy of the borrower farmers.