Can Access to Institutional Credit Promote Adoption of Improved Technology? A Case of Biofertilizer Use among the Indian Paddy Farmers

Abstract

Access to institutional credit plays multiple roles in the livelihoods of agricultural households, an important among them being the promotion of adoption of improved production technologies. Using large-scale national level data from the NSS 77th round survey, the study attempts to explore the role of institutional credit in the adoption of biofertilizers among the paddy-growing farmers of India. Our analysis revealed that only 35 per cent of the agricultural households accessed institutional credit, of which a further lower share of about 18 per cent of the households had access to Kisan Credit Card (KCC). The study revealed that the adoption of biofertilizers was less among the sample farmers, with only 12.62 per cent of the agricultural households reporting using biofertilizers. Households with access to institutional credit had higher expenditure on paddy production inputs except for seeds, diesel, electricity, and irrigation. Estimates of the Double-Hurdle Model showed that while individual and demographic characters did not affect the level of expenditure on biofertilizers, affiliation to social groups other than the scheduled caste group, awareness on MSP, access to groundwater and expenditure on other production inputs had a significant positive effect on the level of expenditure on biofertilizers. The positive impact of access to KCC on biofertilizer expenditure by paddy growers was evident. However, the significant negative effect of area under paddy and crop insurance points towards less popularity of biofertilizer use among farmers with larger area under paddy and those who are risk averse.