Credit Exclusion of the Poor

In India, about 55% of the workforce is dependent on agriculture and most of these cultivators, being small or marginal farmers, require financial help on a regular basis for their farming activities. Needless to say, such poor farmers suffer from irregular and volatile income. As these households do not possess adequate savings, accessibility to financial resources at reasonable terms and conditions is becoming a crucial parameter for their productive activities and hence, in turn, their well-being. Based on the household level data provided by the National Sample Survey Organisation (NSSO) of India, this paper examines the nature of exclusion faced by farmer households in credit market across selected prominent states of India. The paper also tries to identify the factors that explain exclusion from access to financial resources by developing a methodology for detection of credit exclusion. It is observed from this analysis that economic development and education increase access to financial resources.