Assessing the Impact of Financial Inclusion on Agricultural Productivity in India

Authors- K.L.N.D. Harshitha, Assistant Professor Md Abusaad

Abstract-India’s agricultural sector, a cornerstone of its economy and a major source of employment, grapples with various obstacles, including inadequate access to financial services among farmers. While financial inclusion is seen as a potential driver for agricultural advancement, its effects on productivity remain unclear. The research aims to bridge the gap by evaluating how financial inclusion impacts agricultural productivity in India. This study also trying to discuss the extent of financial inclusion in agriculture sector in India. This study has used secondary data taken from the Reserve Bank of India and World Development Indicators from 1970 to 2020. The study employs an ARDL (Autoregressive Distributed Lag) model to examine the relationship between financial inclusion and agricultural productivity. The analysis uncovers both immediate and enduring influences of financial factors on agricultural output. Long-run results suggest that although expansive monetary policies may impede agricultural expansion, enhanced access to credit and increased fertilizer application stimulate productivity. In the near term, fluctuations in broad money supply and easing of financial limitations positively correlate with agricultural growth. Conversely, rising domestic credit growth and prior financial constraints have adverse effects. By shedding light on the intricate interplay between financial inclusion and agricultural productivity in India, this study provides valuable insights for policymakers. It highlights the varied impacts of different financial tools and policies over time, guiding the development of precise strategies to promote financial inclusion in ways that bolster sustainable agricultural development.

DOI: /10.61463/ijset.vol.12.issue5.248