Farm Financing Over Two Decades: The Transformation of Agricultural Credit Sources in Madhya Pradesh (KEY IJP************470)

• Dr. Ajad Singh,Dr. Ghanshyam Bairwa,Dr. Amrat Lal Meena

Abstract

This study investigates the evolving credit landscape for farmers in Madhya Pradesh between 2002-03 and 2018-19, focusing on shifts in loan sources, interest rates, and income growth across varying landholding sizes. Drawing on data from the National Sample Survey Offices (NSSO) Situation Assessment Survey (SAS) Rounds 59 (2003) and 77 (2019), this research has three primary objectives: to analyze the relationship between farmer income growth and loan access, to evaluate changes in the distribution of institutional and non-institutional credit sources, and to assess trends in interest rates and loan shares across these sources.Using a harmonized categorization of loan sources, this study consolidates government, cooperative bank, and bank loans as institutional sources, and loans from moneylenders, traders, and family connections as non-institutional. Through quantitative analysis, we identify significant trends, including an overall shift towards institutional loans, notably from banks, and reduced dependence on high-cost non-institutional loans. This shift corresponds with declining interest rates for institutional loans, likely a result of enhanced agricultural policies and financial reforms. The findings reveal critical insights into credit accessibility challenges for small farmers and emphasize the role of targeted policy interventions in supporting equitable financial inclusion, contributing to sustainable agricultural growth and income stability.