Title:
ROLE OF INSTITUTIONAL CREDIT IN INDIAN AGRICULTURAL PRODUCTION: A DETAILED TIME SERIES ANALYSIS

Authors:
Amrita Bhattacharya

Volume - 2 Issue - 12, Pages - 5663-5712

Abstract:
In this paper, I look at the relation between institutional credit and agricultural production through time series analysis. This analysis gave some expected yet not so desired results. Stationarity and Co-integration, two major characteristics of time series analysis and long run relationship between variables have been checked for the chosen variables, followed by identification of the stochastic process involved in each series. The series we've chosen for analyzing the 'Effect Institutional Credit on Indian Agriculture' are the following: Production of food grain and major commercial crop in India in between 1970-2008 and Institutional credit to agricultural sector over the same time period. The empirical results suggest that Indian agriculture can improve a lot if sufficient amount of credit is issued to agricultural sector and if the issued fund is used efficiently. Farmers have to depend on non-institutional credit sources. Besides, complex credit policies have also refrained the farmers from taking a step towards institutional sources. The results also show that dependence on monsoon results in fluctuation in agricultural production, which means farmers' default rate increases in times of bad monsoon, so banks do not issue credit to them. In turn, lack of fund compels the farmers to stick to old production techniques, behavior of monsoon and non-institutional sources of credit charging high interest rates. So, productivity doesn't rise significantly.

Cite this Article:

[Bhattacharya, Amrita. "ROLE OF INSTITUTIONAL CREDIT IN INDIAN AGRICULTURAL PRODUCTION: A DETAILED TIME SERIES ANALYSIS." International Journal of Social Science and Economic Research, vol. 2, no. 12, 2017, pp. 5663-5712. December.]