Do you think that the low share of formal sector credit for poorer households has been one of the factors for farmar distress in our country? Discuss
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Answer:
Letting farmers use Kisan Credit Card for non-farm use for a limited time can help improve credit facility to small farmers
The returns earned by farmers, who have access to formal credit, are on an average 17 per cent higher than what farmers, who are dependent on informal sources including loan sharks, earn, said an agricultural economist.
Besides, access to institutional credit increases the per capita monthly consumption expenditure (MCE) by 10 per cent compared to those without formal credit facility. The per capita MCE is a proxy for household income and, therefore, an increase in household expenditure reflects a decline in poverty, said Anjani Kumar, Research Fellow at the International Food Policy Research Institute (IFPRI), New Delhi Office.
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