Role of agriculture credit in enhancing livelihood of farmers: Evidence from Northern Tamil Nadu


  • Kiruthika S Assistant Professor, Adhiparasakthi Horticultural College
  • Kiran S PG scholar, Tamil Nadu Agricultural University



Agriculture Credit, technical efficiency, Tobit regression


Agricultural credit plays a vital role in improving productivity and efficiency in the farming sector. The pattern and extent of loan utilization and crop loan diversification was analyzed with sample farmers from K.V. Kuppam and Gudiyatham blocks of Vellore district where 45 farmers (borrowers and non-borrowers) from each block were selected respectively by multistage random sampling method.  The majority of the sample respondents are educated where 56.36 per cent of borrowers and 45.71 per cent of non-borrowers have secondary education. The major crops grown by the sample farmers were papaya, mango, and coconut. Major sources of credit for farmers were found to be co-operative banks (52.10 %) followed by relatives and friends (26.99 %), commercial banks (12.26 %) and money lenders (8.65%). An 83.40% of loan amount was utilized for the crop production, 11.41% was used for other farm enterprises and 5% was used for household consumption. About 86.07 per cent of borrowers used the loan amount for crop production while 8.93 per cent of loan amount is used for other farm production purpose and 7.23 per cent is used household purpose. Technical efficiency scores were higher for borrowers (0.79) when compared with non-borrowers (0.63). The results of Tobit regression show that crop loan availed by the farmers, gross cropped area and net irrigated area has a significant effect on the technical efficiency of farm business. Availing loans has helped farmers to adopt new technologies and increased the technical efficiency of farming.

Author Biography

Kiran S, PG scholar, Tamil Nadu Agricultural University

department of Agri business management


Ayaz, S., Hussain, Z. (2011). Impact of institutional credit on production efficiency of farming sector: A case study of District Faisalabad. Pakistan economic and social review, 149-162.

Baba, S. H., Wani, M. H., Mir, M. M., & Bazaz, N. A. (2015). Econometric Analysis of Demand and Supply of Institutional Credit to Agriculture in Jammu and Kashmir. Economic Affairs, 60(4), 669. DOI:10.5958/0976-4666.2015.00094.7

Bashir, M. K., Mehmood, Y., & Hassan, S. (2010). Impact of agricultural credit on productivity of wheat crop: Evidence from Lahore, Punjab, Pakistan. Pakistan Journal of Agricultural Science, 47(4), 405-409.

Bhalla, G.S., Singh, G., 2010. Growth of Indian Agriculture: A District Level Study, Planning Commission, Government of India.

Chandio, A. A., Jiang, Y., Gessesse, A. T., & Dunya, R. (2019). The nexus of agricultural credit, farm size and technical efficiency in Sindh, Pakistan: A stochastic production frontier approach. Journal of the Saudi Society of Agricultural Sciences, 18(3), 348-354.

Chavan, R., Joshi, A. T., Patil, S. S., & Hiremath, G. M. (2016). Utilization pattern of agriculture crop loan by farmers in India with special reference to Karnataka. Indian Journal of Economics and Development, 4(12), 1-6.

Das, A., Senapati, M., & John, J. (2009). Impact of agricultural credit on agriculture production: an empirical analysis in India. Reserve Bank of India Occasional Papers, 30(2), 75-107.

Gandhimathi, S., Vanitha, S. (2010). Determinants of borrowing behaviour of farmers–A comparative study of commercial and co-operative banks. Agricultural Economics Research Review, 23(347-2016-17028), 157-164. 10.22004/ag.econ.92163

Government of India (2021), Agricultural Statistics at a glance, Ministry of Agriculture and Farmers Welfare, Department of Agriculture, Cooperation & Farmers Welfare, Directorate of Economics & Statistics, New Delhi.

Hans P. Binswanger, Shahidur R. Khandker (1995) The impact of formal finance on the rural economy of India, The Journal of Development Studies, 32:2, 234 262, DOI: 10.1080/00220389508422413

Kannan, E. (2011). Relationship between agricultural credit policy, credit disbursements and crop productivity: A study in Karnataka. Indian Journal of Agricultural Economics, 66(902-2016-67329).

Kshama, A. V., & Santha, A. M. (2019). A comparative study on the performance of various types of loans availed by the farmers in Thiruvananthapuram district. Economic Affairs, 64(4), 689-694. DOI: 10.30954/0424-2513.4.2019.2

Kumar, Vinod. (2021), Trends and Patterns in Agriculture Credit in India: A district level analysis of Uttar Pradesh, Working Paper 2021-I, National Bank for Agriculture and Rural development, Mumbai.

Laha, A. (2013). Technical efficiency in agricultural production and access to credit in West Bengal, India: a stochastic frontier approach. International Journal of Food and Agricultural Economics (IJFAEC), 1(1128-2016-92010), 53-62. DOI:10.22004/ag.econ.160094

Mishra, S. (2008). Risks, farmers’ suicides and agrarian crisis in India: Is there a way out?. Indian Journal of Agricultural Economics, 63(902-2016-67948).

Narayanan, S. (2016). The productivity of agricultural credit in India. Agricultural Economics, 47(4), 399-409.

Rani, S. P. (2020). Economic Analysis of Agricultural Credit on Production Efficiency of Borrower Farms. Journal of Applied Life Sciences International, 23(12), 102-110.

Sial, M. H., & Carter, M. R. (1996). Financial market efficiency in an agrarian economy: Microeconometric analysis of the Pakistani Punjab. The Journal of Development Studies, 32(5), 771-798.




How to Cite

S, K., & S, K. . (2023). Role of agriculture credit in enhancing livelihood of farmers: Evidence from Northern Tamil Nadu. International Journal of Social Sciences Review, 4(2), 68–81.