Evaluating the Performance of the Kisan Credit Card Scheme in Bihar

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The Kisan Credit Card Scheme was introduced in India in 1998-99 has since become a flagship programme providing access to short-term credit in the agricultural sector. According to the Government of India, over a 100 million cards had been issued cumulatively by March 2011. Using data from 2004-05 to 2009-10, the paper critically examines the determinants of KCC lending across states in India and districts in Bihar. We also examine the effects of the scheme on agricultural growth and yields. Our results suggest that states with initially better access to agricultural credit show sbsequently greater amounts of KCC lending. However, Bihar and other BIMARU states also show faster adoption rates that cannot be explained by their recent growth accelerations. Within Bihar, we see that districts with initially greater lending in KCC continue to to pull further away from other districts while in terms of account holders there is evidence of convergence. Finally, we do not see any evidence of KCC lending on state or district level agricultural productivity.