Institutional Credit to Mountain Agriculture: Issues of Structural Changes and Impact in Jammu & Kashmir$

The study has looked into the institutional credit in relation with agricultural productivity in Jammu & Kashmir. The results have revealed that although the credit deployment of scheduled commercial banks (SCBs) to agriculture has increased in absolute terms, its percentage share in the total credit outstanding has declined sharply. The intensity of agricultural credit has also declined over the years. Despite significant changes since 1980s, direct agricultural credit continued to contribute a higher proportion and had a spurt in late-2000s owing to the inception of banking reforms. The share of rural banks has declined due to a decline in the number of RRBs. Direct agricultural credit outstanding in different regions has revealed wide disparity across the state; Kashmir region alone received around 60 per cent while Ladakh region have a meagre proportion of it. The SCBs have been found advancing only 7.61 per cent of the credit requirement in the state and this gap is more pronounced in the Ladakh region. The estimates of simultaneous equation model have revealed a significant contribution of credit in enhancing agricultural productivity in the state. The study has given some policy suggestions for enhancement of growth and intensity of agricultural credit and revival of rural banks.