Evaluation of the Kisan Credit Cards Scheme and its Impact

Abstract

Globally, financial inclusion has been adopted as a goal for sustainable development and balanced growth. Agriculture and allied activities are the major drivers of the Indian growth story. Despite increasing emphasis on self-sufficiency and self-reliance, Indian agriculture has witnessed lacklustre growth due to a lack of institutional development. To boost Indian agriculture, Indian Government has introduced various schemes. Kisan Credit Card scheme was launched in 1998 as a credit delivery mechanism to provide access to finance for crop production, consumption, post-harvest, and maintenance purposes. The purpose of this project is to study the impact of financial inclusion and literacy on adoption of Kisan Credit Cards. It also aims at understanding various factors that impact the Kisan Credit Card Holdings in Rural India. For this project, CMIE (Canter for Monitoring of Indian Economy) data-set People of Indiadx, Consumer Pyramids were used for the purpose of analysis. The data reveals some interesting facts, such as a vast gap in Kisan Credit Card holdings between people with Bank Accounts and those without. Not only data emphasizes the Kisan Credit Card Holding among bank account holders as compared to the non-bank account holders, but it also highlights the impact of demonetization during May 2017 on Kisan Credit Card Holding among non-bank account holders. Further, it has been observed that literate farmers are more prone to adopt Kisan Credit Card as compared to illiterate farmers. Owing to increasing emphasis of the policy makers such as NA BARD and Reserve Bank of India on rural and priority lending, Kisan Credit Card scheme is more successful in the Rural areas. To achieve the objective many financial instruments such as Credit Cards, Health Insurance, Life Insurance have been launched by the Government of India. Data reveals a significant relationship between financial inclusion and adoption of Kisan Credit Cards. Overall, the period of May 2017 to Dec 2017 exhibits the demonetization impact on adoption of Kisan Credit Card holders irrespective of their existing situation. Through this study we can establish that Kisan Credit Cards do have impact on income of the households. One of the major findings of the report is that organized and large farmers are more likely to subscribe to Kisan Credit Card as compared to the small farmers and agricultural labourers. With introduction of Ru pay ATM Kisan Credit Cards in the year 2016 and demonetization there has been sudden jump in adoption of Kisan Credit Cards, particularly among the progressive farmers.