Assessing the impact of lending through Kisan Credit Cards in rural India: Evidence from Eastern India

This paper attempts to identify the determinants of access to the KCC program and empirically evaluate its impact on farmers’ use of agricultural inputs and farm household incomes in Eastern India. Also examined whether the possession of KCC reduces the farmer’s dependence for borrowing on moneylenders. The estimation is based on Coarsened Exact Matching (CEM) approach, which is an increasingly popular method of estimating causal effects. The study uses a large survey of rural/farming households in eastern India (Bihar, Eastern Uttar Pradesh, Jharkhand, Odisha, and West Bengal). Findings reveal that access to KCC is strongly associated with the socioeconomic and demographic characteristic of farming households. Find that access to KCC increases farmers’ use of the agricultural inputs and households and farm income especially for marginal and small farmers. Finally, access to KCC reduces farmer’s dependency on moneylenders for borrowing credits by 25 percent.