Role of Bank Credit in the Development of Horticulture in Himachal Pradesh: An Empirical Analysis of Credit Patterns, Accessibility, and Impact on Productivity and Farmer Income

Abstract

This comprehensive study examines institutional credit's multifaceted role in horticultural development in Himachal Pradesh during 2019-24, employing rigorous mixed-methods research design integrating secondary macro-level data from NABARD District Credit Plans, RBI Agricultural Credit Statistics, and State Horticulture production data with primary micro-level farmer survey (n=420 farmers, 8 districts, stratified random sampling). Analysis revealed substantial credit expansion from ₹1,245 crores to ₹1,840 crores representing 47.8% growth and 10.2% CAGR, with institutional credit demonstrating stronger growth (10.8% CAGR) than non-institutional (6.3%), improving institutional share from 78.7% to 80.4%. Exceptionally strong credit-production correlation emerged (Pearson's r=0.986, p<0.001, R²=0.972), with regression indicating each ₹100 crore credit increase associated with 16,800 tonnes production enhancement. Credit source analysis revealed commercial banks' dominance (42%, ₹621 crores), followed by RRBs (28%), cooperatives (18%), NABARD (8%), and private (4%). Substantial district disparities emerged: Shimla ₹285 crores versus Una ₹85 crores (3.4-fold), per-hectare ₹42,000 vs ₹18,000 (2.3-fold), per-farmer ₹52,000 vs ₹21,000 (2.5-fold). KCC constituted 57% (₹1,050 crores) while term loans 43% (₹790 crores). Utilization showed productive allocation: inputs 32%, orchards 28%, irrigation 15%, mechanization 12%, post-harvest 8%, working capital 5%. Multiple linear regression controlling confounders revealed ₹1 lakh credit increase associated with 8.4% productivity enhancement (β=0.084, p<0.001, R²=0.78, F=124.56). Income analysis demonstrated systematic progression from ₹98,000 (no-credit) to ₹275,000 (>₹2 lakh credit), representing 2.8-fold differential, with ANOVA confirming highly significant differences (F=78.45, df=4,415, p<0.001). Accessibility analysis revealed only 62% farmers accessed institutional credit, indicating 38% exclusion gap. Priority interventions recommended include enhanced accessibility through branch expansion and procedural simplification, district-proportional allocation addressing spatial disparities, credit instrument diversification with higher KCC limits and streamlined term loans, integrated credit-extension packages, risk mitigation through expanded insurance and flexible repayment, cooperative revitalization, and comprehensive monitoring systems.