[Link].

ANGRAU 41(3) 75-81, 2013

A STUDY ON GROWTH, PERFORMANCE AND IMPACT OF KISAN CREDIT

CARDS ON FARMER’S INCOME IN RAJASTHAN – AN ECONOMIC APPROACH
S. S. MEENA and G. P. REDDY
Department of Agribusiness Management and ABM-Division, Head, NAARM,
College of Agriculture, Rajendranagar, Hyderabad -500 030

Date of Receipt : 1-06-2013 Date of Acceptance : 17-08-2013

ABSTRACT
In India, The Kisan Credit Card Scheme was initiated in 1998-99 providing entrance to short term credit in
the agricultural sector. The paper vitally examines the growth in Kisan Credit Cards issued, pattern of credit acquisition
by the farmers, its impact on farmer’s income and constraints faced by the farmers holding Kisan Credit Card (KCC)
across Karauli district in Rajasthan State, India. The study used both primary and secondary data from the year 2001
to 2011 used for analyzing the objectives. Stratified random sampling method was used for Selection of samples.
Thus, a total of 120 farmers were selected for collecting the required data for the study through pre-tested questionnaire.
The results revealed that the number of kisan credit cards (KCC) issued from past 10 years was continuously
positive and is increasing in the Commercial Banks (29.80), Regional Rural Banks (19.57) where as Co-operative
Banks (-6.76) are showing decline trends. The study also examines that, Commercial Banks are the major source for
farmers for the credit which sanctioned Rs. 8,156 lakhs (77.23 %) of the total credit given by the banks to the farmers.
While RRBs and Co-operative Banks are given Rs. 1,112 lakhs (10.53 %) and Rs. 934 lakhs (08.84 %) respectively
and the share of credit from the money lender to the farmer was Rs. 358 lakhs (03.39 %) of the total credit. The results
also reveal that, the income of kisan credit card (KCC) holders is 25 to 30 per cent more than the Non kisan Credit
Card (KCC) holders. This income gap is attributed because Kisan Credit Card (KCC) holders use good quality input
material in agricultural operations. However, the study also says that, the large number of the farmers in both the
categories opined that the rate of interest was high (61.67 % in Kisan Credit Card (KCC) and 93.33 % in non-Kisan
Credit Card (KCC)). Hence, the study suggests that as the large number of the farmers in both the categories opined
that the rate of interest was high (61.67 % in Kisan Credit Card (KCC) and 93.33 % in non Kisan Credit Card (KCC)
and also there is a need to consider the additional activities related to crop production while fixing credit limit under
Kisan Credit Card (KCC). Hence, banks are suggested to consider the additional activities while fixing credit limit
which ensures bridging the credit gap.

INTRODUCTION like fertilizers, irrigation, pesticides, chemicals,

capital, etc.
Agriculture is the backbone of our economy.
The share of agriculture in the Gross Domestic The incorporation of Kisan Credit Card (KCC)
Product (GDP) is 14 % which provides employment Scheme was done by RBI and NABARD in 1998-99.
to nearly 66 per cent of population in the country. Since, incorporation of Kisan Credit Card (KCC)
Agricultural credit, Kisan Credit Card (KCC) is an scheme, State Cooperative Banks (SCBs) through
instrument which played a very important role in DCCBs and PACS and also the Regional Rural Banks
development of agricultural sector. It enabled the (RRBs) and Commercial Banks (CBs) are
farmer to go for short-term credit which is used by implementing the scheme under the guidelines of
the farmers for purchase of inputs and other services. NABARD. Samantara (2010) mentioned that the
Farmers prefer short-term loans and medium-term introduction of a new credit product called Kisan
loans while some large farmers are used to long-term Credit Card (KCC) in 1998-99 with three different sub-
credit for completing their needs those are related to limits viz. production, assets maintenance and
agricultural inputs, raw materials other agricultural consumption needs is a step in this direction to
allied activities also. The Green Revolution of Indian address the challenge. Farmers have been given
agriculture is a good example to a large extent which sufficient freedom to decide how to use their credit,
depends on financial institutions for the support to while at the same time a set repayment schedule
agricultural sector in terms of expansion in inputs has been provided. However for this scheme to be

email: gpreddy_naarm@[Link]

79
 MEENA and REDDY

successful, education of both the farmers and also selected for the purpose of study. These respondents
the bank officials about the scheme is required. were selected by stratified random sampling method,
thus, a total of 120 farmers were selected for
The Kisan Credit Card is a pioneering credit
collecting the required data for the study. Secondary
delivery innovation for providing adequate and timely
data was collected from District Lead Bank, NABARD,
credit to farmers under single window, with flexible
journals, ([Link] etc. The data
and simplified procedure, adopting whole farm
collected on number of Kisan Credit Card (KCC)
approach, including the short-term credit, medium
issued and amount sanctioned in Karauli district of
term and long term credit needs of the borrowers for
Rajasthan from the year 2001 to 2011. The data
agriculture and allied activities and a reasonable
collected were tabulated, processed and analyzed
component for consumption needs. Its coverage is
using appropriate tools and technique. The CAGR
comprehensive and broad which is extended to all
method was used to calculate the growth of Kisan
types of farmers (Kallur, 2005). Interestingly, Andhra
Credit Card (KCC) in the study area. The credit
has yet again bagged first position among all states acquisition pattern is measured to the amount taken
in the count ry with regard to by the farmers. The impact of Kisan Credit Card
the issue of KisanCredit Cards for ‘2001-2002,” (KCC) on farmer’s income is determined by the
([Link]. economictimes. [Link],2002) comparison of the income of Kisan Credit Card (KCC)
announced by [Link], SLBC chairman Andhra holder and Non-Kisan Credit Card (KCC) holders.
Bank. He also stated that, against a target of 40 lakh Opinion survey method was conducted to study the
Kisan Credit cards, AP had issued 42.7 lakh cards institutional and management constraints.
during the year. AP State Co-operative Bank has
To estimate Compound Annual Growth Rate
topped the list by issuing 30.6 lakh cards. During the
(CAGR), this can be written as:
previous year too AP was ranked first in the country
with regard to the issue of Kisan credit cards. For If yt denotes the observation (e.g. number of
the year ended March 2001, AP had issued as many KISAN CREDIT CARD (KCC) issued) at time t and r
as 34,00,487 Kisan Credit Cards while Maharashtra is the compound growth rate, model employed for
and Rajasthan issued 17,61,511 and 15,13,697 cards estimating r is based on Eq. (1):
respectively. yt = y0 (1+ r) t ………… (3.1)
The performance in the implementation of The usual practice is to assume a
the Kisan Credit Card (KCC) scheme has been multiplicative error-term exp (€) in Eq. (1) so that the
impressive in the States of Andhra Pradesh, Gujarat, model may be linearized by means of logarithmic
Haryana, Karnataka, Maharashtra, Punjab, transformation, giving Eq. (2):
Rajasthan, T amil Nadu, Uttar Pradesh and ln (yt) = A + Bt + € ………… (3.2)
Uttaranchal.
Where, A = ln (y0), and B = ln ( 1 + r ). Eq. (2) is then
METHODOLOGY fitted to data using “method of least squares” and
The aim of the study was to evaluate the goodness of fit is assessed by the coefficient of
overall performance of Kisan Credit Card scheme. determination R2. Finally, the compound growth rate
is estimated by Eq. (3):
The study was conducted in three major Kisan Credit
Card (KCC) issuing tehsils namely Karauli, Hindaun r^ = exp (B^) – 1 …………. (3.3)
city and Nadoti of Karauli district in Rajasthan. For Where r^ = estimated compound growth rate.
selection of sample farmers, in each tehsils, two exp (B^) = co-efficient of time (t).
villages were selected for study purpose based on
RESULTS AND DISCUSSION
the number of Kisan Credit Card (KCC) issued. Every
village was divided into four categories i.e. marginal 1. Growth in kisan credit cards issued in the study
farmers (< 1ha), small farmers (1 to 2ha), medium area
farmers (2 to 4ha) and large farmers (> 4 ha.). In The analysis of growth rate and per cent
each village 10 Kisan Credit Card (KCC) holders and change in kisan credit cards issued in the study is
10 Non-Kisan Credit Card (KCC) holders were presented in the Table.1 the results shows that, the

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 A STUDY ON GROWTH, PERFORMANCE AND IMPACT OF KISAN CREDIT CARDS ON FARMER’S

number of Kisan Credit Card (KCC) issued from Card (KCC) Scheme. Loganthan (2008) analyzed
2001to 2011 was continuously increasing in the Kisan Credit Card scheme and came out with similar
Commercial Banks with slight variations in few years result. Patel (1999) suggested to modify the scheme
as well as Regional Rural Banks were showing the to fit the needs of users in particular area than
same pattern while Co-operative Banks were exact introducing uniform scheme in the country. Trivedi
opposite of these two. The numbers of Kisan Credit (2006) reviewed status of Kisan Credit Card (KCC) in
Card (KCC) issued was high in the initial years of Madhya Pradesh and concluded that the scheme had
incorporation of Kisan Credit Card (KCC) Scheme achieved less than its target. Anjani kumar et al (2007)
but they were showing high negative growth rate in revealed that the distribution of credit under Kisan
last four to five years. The compound growth rate Credit Card was less skewed. Singh and Sekhon
calculated from the ten years data. The compound (2006) concluded that Kisan Credit Card Scheme was
annual growth rates for Commercial Banks, RRBs efficient for meeting short term credit requirement.
and Co-operative Banks were 29.80 per cent, 19.57
3. Impact of kisan credit card on farmer’s income
per cent and -6.76 per cent respectively. Three banks
shown significant at 1 % level of significance The perusal of Table-3 shows that, in the
compound growth rate and here overall CGR is 16.37 category of Kisan Credit Card (KCC) holder, marginal
per cent which is also significant. farmer’s average income is Rs. 62,333.33 as
compared to Non-Kisan Credit Card (KCC) holder,
2. Pattern of credit acquisition by the farmers
marginal farmer’s average income is Rs. 48,000. The
The pattern of credit acquisition is presented difference in the income of marginal farmers is Rs.
in the Table-2 represented that in the year 2006-07, 14,333.3 (7.66 % of total marginal farmers KCC
the amount sanctioned through Kisan Credit Card holders). In the small farmer’s category, the
(KCC) in the Karauli district were Rs.1,887 lakh only. difference in the income of small farmer’s income
In Karauli district of Rajasthan, Commercial Banks with respect to Non-Kisan card credit holder was Rs.
are the major source for farmers for the credit which 27,677.77. It accounted for 8.01 % of total small
sanctioned Rs. 8,156 lakh (77.23 %) of the total credit farmers KCC holders. In the category of medium
given by the banks to the farmers. While RRBs and farmers average income of Kisan Credit Card (KCC)
Co-operative Banks are given Rs. 1,112 lakh (10.53 holders is Rs.1, 34,000 as compared to Non-Kisan
%) and Rs. 934 lakh (08.84 %) respectively and some Credit Card (KCC) holder’s average income is Rs. 1,
of the farmers have taken credit from the money 15,000. The difference in the income of medium
lender i.e. 358 lakh (03.39 %) of the total credit. From farmer’s is Rs. 19,000 (4.72% of total medium farmers
these data of the different banks which are available KCC holders) and in the category of large farmer’s
in the study area, we conclude that most of the average income of Kisan Credit Card (KCC) holder’s
farmers have taken the credit from the banks. Banks is Rs. 1, 98,000 as compared to Non-Kisan Credit
were the major source of credit acquisition in the Card (KCC) holder’s average income is Rs. 1, 65,000.
studied area. The difference in the income of large farmer’s is Rs.
33,000 (5.55 % of total large farmers KCC holders).
The compound annual growth rate was 16.37 The result of this comparison of farmer’s income of
per cent per annum and there is consistent growth in Kisan Credit Card (KCC) holder’s and Non-Kisan
Kisan Credit Card (KCC) issued in Karauli District of Credit Card (KCC) holder’s Category reveals that,
Rajasthan (Table 1). As far as the study area is average farmers income for the KCC was higher than
concerned, in the Karauli district there is high positive that of non KCC category. It also reveals the
growth both in the number of Kisan Credit Card (KCC) adequacy of credit for the Kisan Credit Card holders
issued and amount sanctioned. It might be due to was more when compared to Non-Kisan Credit Card
either banks were already reached the satisfaction holders. The income of Kisan Credit Card (KCC)
level or there was good performance of banks with farmers was high due to availability of credit, which
respect to implementation of Kisan Credit Card (KCC) was used for good quality input material required in
but we have to need some changes in Kisan Credit the agricultural production process.

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 MEENA and REDDY

Table 1. Percentage change and growth rates in number of Kisan Credit Card (KCC) issued in Karauli
District (Agency-wise status of Kisan Credit Card (KCC)
Sr. Agency Commercial Banks RRBs Co-operative Banks Total
No. KISAN KISAN KISAN
CREDIT CREDIT CREDIT
CARD % change CARD % change CARD % change
(KCC) over (KCC) over (KCC) over
issued previous issued previous issued previous
Year (in lakh) year (in lakh) year (in lakh) year
1. 2001-02 58 - 22 - 195 275
2. 2002-03 117 101.72 56 154.54 125 -35.897 298
3. 2003-04 215 83.76 79 41.07 115 -8 409
4. 2004-05 469 118.14 69 -12.65 129 12.17 667
5. 2005-06 530 13.00 99 43.47 107 -17.05 736
6. 2006-07 596 12.45 117 18.18 102 -4.67 815
7. 2007-08 675 13.25 129 10.25 88 -13.72 892
8. 2008-09 729 8.00 147 13.95 79 -10.22 955
9. 2009-10 650 -10.83 132 2.32 89 12.65 871
10. 2010-11 810 24.61 169 28.03 99 11.23 1078
Total 4849 1019 1128 6996
%
change
in 2010- 364.11 299.18 -53.50
11 over
2001-02
29.80** 19.57** -6.76** 16.37**
CAGR (5.295) (5.690) (4.143) (6.904)
Note: ** Significant at 1 % level ;
* Significant at 5 % level
Figures in parentheses are‘t’ values; CAGR: Compound Annual Growth Rate.
Table 2. Agency-wise amount sanctioned in Karauli District (Rs. in lakh)

Money
Commercial Co-operative
Lenders
Agency Banks RRBs Banks Total
1485 175 162 65 1887
2006-07 (78.69) (09.27) (08.58) (03.44) (100)
1567 225 179 68 2039
2007-08 (76.85) (11.03) (08.77) (03.33) (100)
1430 239 201 82 1952
2008-09 (73.25) (12.24) (10.29) (04.20) (100)
1741 217 194 74 2226
2009-10 (78.21) (09.74) (08.71) (03.32) (100)
1933 256 198 69 2456
2010-11 (78.70) (10.42) (08.06) (02.80) (100)
8156 1112 934 358 10560
Total (77.23) (10.53) (08.84) (03.39) (100)
Source: Lead District Bank (Bank of Baroda). Note: Figures in parentheses are per cent to amount
sanctioned.
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 A STUDY ON GROWTH, PERFORMANCE AND IMPACT OF KISAN CREDIT CARDS ON FARMER’S

Table 3. Farmer’s Income in Karauli district of Rajasthan (in Rs.)

KISAN CREDIT CARD (KCC) holders
Sr. Marginal Small Medium Large
No. Name of Tehsils (n=15) (n=15) (n=15) (n=15) All (n=60)
1 Karauli 62000 125000 130000 198000 515000
2 Hindaun 65000 116000 127000 201000 509000
3 Nadoti 60000 104000 145000 195000 504000
Total 187000 345000 402000 594000 1528000
Average 62333.33 115000 134000 198000 509333.3
Non- KISAN CREDIT CARD (KCC) holders
Sr. Marginal Small Medium Large
No. Name of Tehsils (n=15) (n=15) (n=15) (n=15) All (n=60)
1 Karauli 45000 87000 120000 170000 422000
2 Hindaun 48000 85000 115000 165000 413000
3 Nadoti 51000 90000 110000 160000 411000
Total 144000 262000 345000 495000 1246000
Average 48000 87333.33 115000 165000 415333.3

Table 4. Opinion of borrower with regard to term and condition of loans

[Link]. Views Categories KISAN Non-KISAN
CREDIT CREDIT
CARD CARD
(KCC) (KCC)
Holders Holders
1. Purpose of loan Agricultural 50 (83.33) 28 (46.67)
Non-Agricultural 10 (16.67) 32 (53.33)
2. Adequacy Adequate 33 (55.00) 23 (38.33)
Inadequate 27 (45.00) 37 (61.67)
3. Timeliness Timely 49 (81.67) 08 (13.33)
Untimely 11 (18.33) 52(86.67)
4. Rate of Interest Low 23 (38.33) 04 (06.67)
High 37 (61.67) 56 (93.33)
5. Repayment Easy 59 (98.33) 55 (91.67)
term Difficult 01 (1.67) 05 (08.33)
6. Procedure for Simple 60(100.00) 09 (15.00)
Advance Cumbersome 00 (0.00) 51 (85.00)
7. Accessibility Easy 57 (95.00) 56 (93.33)
Difficult 03 (05.00) 04 (6.67)
8. Security Flexible 57 (95.00) 29 (48.33)
Rigid 03 (05.00) 31 (51.67)
9. Loan Frequently 27(45.00) 07 (11.67)
Supervision Rarely 33 (55.00) 53(88.33)
10. Did borrowing Yes 59 (98.33) 60 (100.00)
helped No 01 (1.67) 00 (00.00)
No. of 60 60
Respondents
Source: Primary data from sample respodents Note: Figures in parentheses are per cent of total respondents.

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 MEENA and REDDY

Table 5. Opinion of Managers in respect of Kisan Credit Card scheme in study area

Sr. No. Particulars Categories Karauli District

(in %)
Sense of worthwhile High 52
1. accomplishment Moderate 30
Low 18
Communication and Co- Well 82
2. ordination Somewhat good 10
Not at all 08
Growth in Agricultural Satisfactory 83
3. Advances Unsatisfactory 17
Number of KISAN CREDIT Satisfactory 93
4. CARD (KCC) issued Unsatisfactory 07
Procedure followed for Easy 100
5. issuing KISAN CREDIT Cumbersome 0
CARD (KCC)
Accessibility to the Branch Easy 75
6. Advance Difficult 25
Agricultural Officer Provided 65
7. Not Provided 35
Time taken to sanction Timely 98
8. loan under KISAN CREDIT Untimely 2
CARD (KCC)
Recovery percentage of Good 98
9. loan under KISAN CREDIT Poor 2
CARD (KCC)
Co-operative 97
10. Attitude of Borrower Non co-operative 3

Source: Primary data from sample respondents

4. Identification of the constraints (61.67 %). About the timeliness, 81.67 per cent
farmers under Kisan Credit Card (KCC) felt that the
Opinion survey met hod of farmer
credit was timely while large number of the farmers
beneficiaries was carried to find out timeliness,
under Non-Kisan Credit Card (KCC) felt that it was
security, adequacy, interest and other issues of Kisan
untimely (86.67 %). The large number of the farmers
Credit Card (KCC) and the results are summarized in
in both the categories opined that the rate of interest
Table. 4. More than 80 per cent of farmers borrowed
was high (61.67 % in Kisan Credit Card (KCC) and
credit to meet the expenditure incurred in agriculture
93.33 % in Non Kisan Credit Card (KCC)).
under the Kisan Credit Card (KCC) category while
only about 47 per cent of the borrowers were reported The opinion of bank managers with respect
to borrow for agriculture purpose in Non- Kisan Credit to Kisan Credit Card (KCC) is presented in Table-5.
Card (KCC) category. This was because the loan With regard to sense of accomplishment in the Karauli
given under KCC was mainly crop loans. With regard district 52 per cent expressed high sense of
to adequacy of credit large number of farmers under accomplishment. In respect of communication with
Kisan Credit Card (KCC) opined that the credit was policy makers regarding agriculture and rural financing
adequate (55 %) but under Non-Kisan Credit Card 82 per cent respondents in the Karauli district felt
(KCC) the borrowers opined that it was inadequate that it was well. According to opinion of bank

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 A STUDY ON GROWTH, PERFORMANCE AND IMPACT OF KISAN CREDIT CARDS ON FARMER’S

managers in Karauli district the number of Kisan to Non-Kisan Credit Card (KCC) holders. The
Credit Card (KCC) issued was satisfactory (93%). institutional and management constraints are
Nearly all the bank managers in the study negligible in the study area but marginal farmers were
area agreed that the procedure followed for issuing not involved in this scheme. The farmers are having
the Kisan Credit Card was simple and favorable to access to adequate and timely credit. There is
the farmers. The loan sanctioned under the Kisan minimum paper work and simplification of
Credit Card (KCC) scheme was in time and majority documentation for withdrawal of funds from the banks.
of them felt that there was easy accessibility to the Now-a-day, banks are providing assured availability
bank branches. As far as recovery of loan under Kisan of credit at any time enabling reduced interest burden
Credit Card (KCC) was concerned, nearly all bank for the farmers. Sanction of the facility for three years
managers in the study felt that it was good and attitude subject to annual review and satisfactory operations
of the borrower was co-operative. and provision for enhancement. Banks are giving
flexibility of withdrawals from a branch other than the
CONCLUSIONS
issuing branch at the discretion of the bank. Kisan
The growth of Kisan Credit Card (KCC) in Credit Card (KCC) holders are benefited due to timely
the study area is positive and the credit acquisition availability of the credit; they are able to buy the
pattern, in case of Karauli district of Rajasthan,
products whenever they want without keeping credit
Commercial Banks are the major source for farmers
in the shops. The study also suggests that, KCC
for the credit which sanctioned Rs. 8,156 lakh (77.23
should not only be a vehicle of short term credit to
%) of the total credit given by the banks to the
agriculture but also increasingly as a source of
farmers. However, the income of Kisan Credit Card
investment and consumption needs of farmers.
(KCC) holders is 25 to 30 per cent more as compared

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