An Economic Analysis of Farmers’ Agricultural Credit Loans in Dindigul District

Abstract

The focus of this paper is economic analysis of farmers’ agriculture credit loans in Dindigul district. The borrowers for both willful and non-willful defaulters in agricultural credit loans have been the issue of the present study. Based on the amount of land under cultivation, 240 sample beneficiaries such as marginal farmers, small farmers, and large farmers were chosen for this study using data from simple random sampling. The percentage method and discriminate linear analysis were the statistical techniques employed in the analysis. Based on the socio-economic characteristics of the borrowers, the borrowers were first classified as non-defaulters and then as defaulters, and finally, the defaulters were further classified as willful defaulters and non-willful defaulters. The study revealed that formal credit for agriculture increased rapidly and was unable to meet the needs of farmers in Dindigul district. The discriminate function analysis used here was to classify farmer borrowers based on a set of independent variables into defaulters and non-defaulters, and then to classify defaulters as willful or non-willful. It concludes that the loans provided by lending agencies resulted in more jobs. Crediting real or actual cultivators with farming as a vocation has a favorable influence or impact on employment creation. At the same time, farmers confront a variety of challenges when seeking agricultural credit from banking institutions.