| dc.description.abstract | Fostering rapid growth in farm sector remains an important policy concern in India
in spite of a significant decline in its share in the gross domestic product (GDP),
from 47% in 1970–1971 to 15% in 2014–2015. The importance of farm sector goes
beyond its income contribution, as it still engages about half of the country’s
workforce and is dominated by small landholders ( 2 ha), the majority of whom
practice subsistence agriculture. The smallholder farmers face numerous challenges,
more prominently the poor access to markets and finances in transiting toward
market-oriented agriculture.
Agricultural markets are fragmented, characterized by a long chain of interme diaries, high marketing costs and margins, low value addition, and low share of
farmers in the final price that consumers pay. Smallholders have little marketable
surplus and face higher marketing and transaction costs in selling it in distant urban
markets (Birthal et al. 2005). Their limited access to institutional finance hampers
them to adopt productivity-enhancing technologies and inputs, and to invest in land
improvements, irrigation, mechanization, and farm storage. Their financial require ments are not large, yet commercial banks and such financial institutions are reluctant
to provide them credit because of the high cost of lending relative to size of the loan,
and higher lending risks (Chen et al. 2015). Further, smallholders have limited and
often less-documented assets to use as collateral to secure institutional finance. | en_US |
