Institute for Social and Economic Change

Working Paper: 478

Whether Caste Impedes Access to Formal Agricultural Credit
in India? Evidence from NSSO Unit Level Data

Karthick V
S Madheswaran



Despite many initiatives and policies that have been taken by the government on access to credit for agricultural growth, the declining share of formal credit (mainly from cooperatives and commercial banks) from 1991 to 2012 has affected marginal and small landholders’ access to credit. Besides, caste is the main predictor of economic outcomes in India that determines access to credit of marginalised communities. Hence, using large national-level unit data of NSSO (AIDIS) and bivariate probit econometric model, we have analysed whether access to cooperative and commercial banks credit is determined by caste. Our findings show that, in India, both commercial, as well as cooperative bank, discriminate against both SCs and STs in access to credit. Thus, this study endorses the critical appraisal of the existing policies of formal credit towards an increase in access to credit for better agricultural growth.

Working Papers