Efficient utilisation of credit by the farmer-borrowers in Chittoor district of Andhra Pradesh, India

The present study has aimed at analyzing the technical and scale efficiencies of credit utilization
by the farmer-borrowers in Chittoor district of Andhra Pradesh, India. DEA approach was
followed to analyze the credit utilization efficiency and to analyze the factors influencing the
credit utilization efficiency, log-linear regression analysis was attempted. DEA analysis revealed
that, the number of farmers operating at CRS are more in number in marginal farms (40%)
followed by other (35%) and small (17.5%) farms. Regarding the number of farmers operating at
VRS, small farmers dominate the scenario with 72.5 per cent followed by other (67.5%) and
marginal (42.5%) farmers. With reference to scale efficiency, marginal farmers are in majority
(52.5%) followed by other (47.5%) and small (25%) farmers. At the pooled level, 26.7 per cent of
the farmers are being operated at CRS, 63 per cent at VRS and 32.5 per cent of the farmers are
either performed at the optimum scale or were close to the optimum scale (farms having scale
efficiency values equal to or more than 0.90). Nearly 58, 15 and 28 percents of the farmers in the
marginal farms category were found operating in the region of increasing, decreasing and
constant returns respectively. Compared to marginal farmers category, there are less number of
farmers operating at CRS both in small farmers category (15%) and other farmers category
(22.5%). At the pooled level, only 5 per cent of the farmers are operating at DRS, majority of the
farmers (73%) are operating at IRS and only 22 per cent of the farmers are operating at CRS
indicating efficient utilization of credit. The log-linear regression model fitted to analyze the
major determinants of credit utilization (technical) efficiency of farmer-borrowers revealed that,
the three variables viz., cost of cultivation and family expenditure (both negatively influencing at
1% significant level) and family income (positively influencing at 1% significant level) are the
major determinants of credit utilization efficiency across all the selected farmers categories and at
pooled level. The analysis further indicate that, escalation in the cost of cultivation of crop
enterprises in the region, rise in family expenditure and prior indebtedness of the farmers are
showing adverse influence on the credit utilization efficiency of the farmer-borrowers.