Journal ID : AMA-02-12-2021-10910
[This article belongs to Volume - 52, Issue - 03]
Total View : 409

Title : Impact of Micro Finance on Agricultural Income in Karnataka India: An Analysis

Abstract :

Micro Finance refers to the process of lending short term loans to entrepreneurs and other individuals, who are in need of funds to fulfil their financial requirements. Banks usually lend loans to the public at a certain rate of interest but with collateral security. Some people will not have any assets for collateral security, so they end up borrowing from informal sources like pawn brokers and other money lenders who usually charge a high rate of interest. Hence, awareness must be given to the general public regarding micro finance and its lending process. The objective of this study was to analyse the difference in earnings between an agriculture farmer who borrows funds from a micro financial institution and a farmer who doesn’t borrow funds from micro financial institutions. Further, this study analysed the agricultural income levels of farmers who borrow from MFIs and non-MFIs. In addition, this study analysed the impact of agriculture farm income on the basis of their borrowing sources. This study also analysed the difference between mean interest rates across groups of agriculture farmers who borrowed from micro-finance sources and those who did not borrow from micro finance sources. Finally, this study looked at how frequently agricultural farmers borrowed money. Primary data has been collected from rural areas of Chitradurga and some parts of Uttar Karnataka district. Questionnaires were prepared for the agriculture farmers who borrow funds from the Micro Financial Institutions and for the farmers who do not prefer to borrow funds from Micro Financial Institutions [MFI]. A sample of 50 people from each group was taken. A T-test was used to perform the analysis to check for differences between agriculture farmer's farm income levels before and after microfinance was obtained. The study found that agriculture farmers who obtained micro finance had statistically better farm income than agriculture farmers who did not obtain micro-finance funding for their farming operations, suggesting that borrowing from micro finance institutions for agriculture farming operations would likely result in an increase in income from farming operations. The second finding of this study was that the mean change in farm income level, as measured by the percent change in farm income, among farmers who had obtained microfinance funding was statistically higher as compared to the mean change in agriculture farm income level among farmers who had not obtained microfinance funding. Furthermore, the study analysed the mean changes in the interest rates of MFIs in comparison with non-micro financial institutions. It was found that microfinance was charging a lower rate of interest when compared to other financial institutions. Finally, the study found that farmers who borrowed from non-MFIs borrowed more frequently than agriculture farmers who borrowed from MFIs

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