Do Farm Size and Social Group Affiliation Determine Credit Access and Income of Agricultural Households?

This paper has examined the pattern of income – in both level and composition, among farmers of different social groups and has assessed the access to credit across these groups in relation to their income levels using the data from reports of 70^th round of NSSO Situation Assessment Survey of Agricultural Households pertaining to the year 2012–13. The income of landless and marginal farmers and of ST, SC and OBC households has been found lower than the all-India average of 6426 per month. The income is not sufficient to cover the consumption expenditure for SC and OBC households as also for landless and marginal farmers at all-India level as well as for households other than ST group. Cultivation has been found the major source of income for landless and lower-marginal farmers (up to 0.40 ha land) as also for all social groups, except the SC households. The access to credit has been low as merely 52 per cent of the households have reported outstanding debt during the survey. The smaller the farm size, the lesser is the access to credit. The access was found low for the ST households, while SC households had access on par with the country average. Of the loans taken, 60 per cent, overall, are from institutional sources and the degree of institutionalization is lower for ST, SC and OBC households. Within each social group, the landless and marginal farmers have received smaller loans compared to the average loan amount. The access to credit and share of formal credit in total are related in direct but non-linear relation which suggests that improving the share of formal credit is likely to increase the overall credit access. Also, a higher access to credit is likely associated with higher incomes. The paper concludes that small landholders and SC and ST households face disadvantages in terms of access to credit, that too from formal sources, activity mix, and income levels. Inclusive but differential strategies are needed to help them to double their incomes.