Impact of Agricultural Credit on Agriculture Production in India: An Econometric Analysis

Abstract

Agricultural credit plays a pivotal role in enhancing farm productivity and ensuring food security in India. This study examines the relationship between institutional credit flow and agricultural production across Indian states using secondary data from NABARD and the Reserve Bank of India for the period 2014-15 to 2023-24. The econometric analysis reveals a statistically significant positive correlation between agricultural credit disbursement and foodgrain production, with an R-square value of 0.864, indicating that 86.4% of the variance in production is explained by credit availability. The regression coefficient of 0.1457 suggests that for every additional unit increase in agricultural credit, foodgrain production increases by approximately 0.146 units. The study also analyzes regional disparities in credit distribution, the performance of different lending agencies, and the coverage of institutional credit across operational landholdings. Findings underscore the need for region-specific credit planning and revitalization of cooperative banking institutions to ensure inclusive agricultural growth.