Deteminants of borrowing behaviour of farmers Dr. Gandhimathi S.*, Assistant Professor, Dr. Ambigadevi P.**, Professor of Economics, Gomathy K. R.***, Ph.D. Scholar * Economics, Avianshilingam Institute for Home Science and Higher Education for Women, Coimbatore ** Avianshilingam Institute for Home Science and Higher Education for Women, Coimbatore *** Department of Economics, Avianshilingam Institute for Home Science and Higher Education for Women, Coimbatore Online published on 13 March, 2012. Abstract Agriculture contributed 19 percent of gross domestic product in India. Agricultural credit is the major input in agriculture (Economic Survey, 2009). There is a strong relationship between agricultural credit and agricultural production. Many of the studies had established this relationship (Feder et al, 1990, Foldz,2004). The Reserve Bank of India fixed a target lending of 18 percent net bank credit to the agricultural sector (Report on trend and progress of banking, 2009). The Approach Paper to the Eleventh Five Year Plan has set a target of 4 per cent for the agriculture sector within the overall GDP growth target of 9 per cent. In this context, the need for affordable, sufficient and timely supply of institutional credit to agriculture has assumed critical importance. In India a multi-agency approach comprising co-operative banks, scheduled commercial banks and RRBs has been followed for purveying credit to agricultural sector. The policy of agricultural credit is guided mainly by the considerations of ensuring adequate and timely availability of credit at reasonable rates through the expansion of institutional framework, its outreach and scale as also by way of directed lending. The demand for agricultural credit arises due to i) lack of simultaneity between the realisation of income and act of expenditure; ii) lumpiness of investment in fixed capital formation; and iii) stochastic surges in capital needs and saving that accompany technological innovations. Credit, as one of the critical non-land inputs, has two-dimensions from the viewpoint of its contribution to the augmentation of agricultural growth viz., availability of credit (the quantum) and the distribution of credit. In backdrop, an attempt was made to identify the determinants of borrowing behaviour of farmers. To conclude, the per borrower crop loan was higher for the medium farmers and lower for the marginal farmers. It was found that there was positive relationship between the amount of loan and farm size except for the semi-medium and large farmers. The amount of Per borrower investment loan was found to be highest for large farmers. The estimated borrowing function explained 67 percent of the variations in the amount borrowed in terms of the socio-economic characteristics of the farmers. Of the variables taken into account, only the land size emerged as significant variable in explaining the variations in the borrowing behavior in the study area. Top |