Background/Objectives: Resource poor conditions, marginalization of holdings and gradual commercialization of farming needs assessment of D-S scenario, utilization and impact of institutional credit on farm returns under agro-climatic diversities of Jammu and Kashmir.
Methods/Statistical analysis: A multi-stage stratified random sampling technique was used to draw a sample of 400 (200 borrowers+200 non-borrowers) respondents, representing each agro-climatic zone to collect primary data to estimate the short term credit requirements and capture the impact of agricultural credit on overall gross farm returns by employing regression analysis technique. Secondary data was also used to supplement the findings.
Results: Various institutional agencies involved in advancing agricultural credit have differential role across agro-climatic zones. Financial institutions advanced only 7.61 per cent of total credit requirement in the state which varied across zones. The productive credit utilization ranged between 65 per cent in IMZ and 98 per cent in SBTZ. The unproductive credit use was higher in IMZ (34.7%) followed by TMZ (24.2%) and CAZ (5.9%). The regression estimates for credit were positive and highly significant in all the agro-climatic zones except in IMZ where it was non-significant due to its higher miss-utilization. However, credit indirectly increased returns through capital formation and adoption of technology in all the zones. Educated farmers understood the possible benefits of scientific application in farming business, however, lacked wisdom for its productive utilization. Irrigation influenced returns positively, however, non-adoption of scientific recommendations was demonstrated by the negative coefficient of expenditure on variable costs across the zones.
Conclusion: Study highlighted huge D-S gaps in institutional credit to agriculture across different zone. Regression estimates revealed that extension of credit encouraged capital formation, adoption of technologies and increased farm returns.