Impact of Socio-economic Variables on Disbursement of Agricultural Credit

Credit flow in agriculture is an important determinant of progress of agrarian economy. The different indicators have been cited from time to time as determinants of credit flow in agriculture. Among various parameters, socio-economic and infrastructure development in rural areas are also important in changing the credit magnitude. The study is based on time series data of Bihar for a period of 25 years that is from 1980–81 to 2005–06. The association was found between agricultural credit flow and different variables such as electrified villages, road length per 1000 kilometers of geographical area, literacy per cent and number of dairy co-operatives per 1000 villages. Per capita electricity consumption was found comparatively much higher in category D districts than those in category A, B, C districts. Thus, it may be concluded that the socio-economic variables have direct relationship with quantum of agricultural credit flow whereas the population per bank branch has negative correlation with the disbursement of agricultural credit in Bihar.