The Effects of Government Policies on Agriculture in Indonesia

Abstract

The content of this research compares the effect of two types of agricultural sector low-interest loans from the government in combination with human development index variables on Indonesia's gross regional domestic product. The government seeks to develop the agricultural sector through various strategies, one of which is the existence of fiscal policies in the form of subsidies. One policy that has been implemented is the interest subsidy for Food and Energy Security Credit (KKPE) and Soft Loans Credit for Agriculture (KUR). KKPE ran from 2008 to 2015. Since 2016, the KKPE policy has been terminated, and all credit is directed through the Soft Loans Credit. This study aims to analyze the effect of these two types of subsidized credit, namely KKPE and KUR, on each province's Gross Regional Domestic Product in Indonesia. The analysis was conducted on data from the top 20 provinces with Indonesia's highest KKPE and KUR realization. The analysis concluded that KKPE partially had a positive effect on GRDP at all quantile levels, and HDI had a positive effect on GRDP only at quantiles 0.15 to 0.35 and 0.80 to 0.95. Another case is with KUR, which does not have a significant effect partially, but with HDI, it has a significant effect on GRDP. Furthermore, KUR and HDI are superior in explaining GRDP compared to KKPE and HDI.