Financial Inclusion Through Kisan Credit Cards in Arunachal Pradesh—The Truth Behind Aggregating Numbers

  • Samir R. Samantara
Part of the India Studies in Business and Economics book series (ISBE)


Arunachal Pradesh, though strategically very imperative, is one of the utmost backward states in India in the traditional wisdom of economic constraints. The extensive inaccessibility and separation from the main stream of the country postured daunting problems to the efforts of socioeconomic improvement of the state. This chapter studies the question of convergence in Arunachal Pradesh agriculture since the last decade. It focuses on the problems of (a) whether there has been a catching-up propensity (β-convergence) of slow-growing districts with fast-growing ones; and (b) whether there has been a propensity towards convergence (σ-convergence) in agricultural productivity during 2000–2010 over a representative cross section of Arunachal Pradesh districts. The chapter also examines the process of Galton’s fallacy through growth-terminal level regressions for robustness of the results. The propensity of low-KCC concentration districts to catch up with high-KCC concentration districts is examined through the unconditional β-convergence approach, and the operation of Galton’s fallacy through growth-terminal agricultural productivity-level regressions. The shrinking of variance in productivity levels is tested by using the σ-convergence approach and the robustness of the results is tested by using alternative test statistics. The results suggest that comparatively agriculturally poor districts, if not all, have been able to catch up with the agriculturally rich districts, demonstrating β-convergence. Although the growth of KCC loans varied across the districts, the average speed of convergence remained more or less equal during both the periods. However, inter-district differences in growths of KCC loans have significantly declined in the state indicating σ-convergence. Neither did the low (agriculture) productivity districts grow faster, nor did the high (agriculture) productivity districts grow slower to demonstrate the catching-up or β-convergence process. These tendencies are likely to continue in Arunachal Pradesh agriculture unless adequate investments or technological interventions are made to enhance agriculture productivity. This would furthermore help in credit deepening and credit widening (both horizontal and vertical financial inclusion) through KCC loans, leading to a further convergence. State governments and banks should create enabling environment that can improve credit absorption capacity of farmers and geographical areas, accelerate flow of credit and loan recovery simultaneously.


Convergence Agricultural productivity Kisan credit card Financial inclusion and technological innovation 


  1. Caree, M., & Klomp, L. (1997). Testing the convergence hypothesis—A comment. Review of Economics and Statistics, 79(4), 683–686.CrossRefGoogle Scholar
  2. Friedman, M. (1992). Do old fallacies ever die? Journal of Economic Literature, 30(4), 2129–2132.Google Scholar
  3. Hotelling, H. (1933). Review of the triumph of mediocrity in business. Journal of American Statistical Association, 28(184), 463–465.CrossRefGoogle Scholar
  4. Islam, N. (2003). What have we learned from the convergence debate? Journal of Economic Surveys, 17(3), 309–362.CrossRefGoogle Scholar
  5. Lichtenberg, F. R. (1994). Testing the convergence hypothesis. Review of Economics and Statistics, 76(3), 576–579.CrossRefGoogle Scholar
  6. McCunn, A., & Huffman, W. (2000). Convergence in US productivity growth for agriculture, implications of inter-state research spill-overs for funding agricultural research. American Journal of Agricultural Economics, 82(2), 370–388.CrossRefGoogle Scholar
  7. Quah, D. (1993). Galton’s fallacy and tests of the convergence hypothesis. Scandinavian Journal of Economics, 95(4), 427–443.CrossRefGoogle Scholar
  8. Sala-i-Martin, X. (1996). Regional cohesion, evidence and theories of regional growth and convergence. European Economic Review, 40(6), 1325–1352.CrossRefGoogle Scholar
  9. Samantara, S. R. (2006a). Infrastructure–agriculture linkages. Indian Journal of Agriculture Economics, 61(3), 254–256.Google Scholar
  10. Samantara, S.R. (2006b). Infrastructure–agriculture linkages in Chhattisgarh. Chhattisgarh Journal of Economics (2nd Annual Conference), pp. 45–51.Google Scholar
  11. Samantara, S. R. (2008). Economic growth and deforestation—A study in Odisha. Indian Journal of Agriculture Economics, 63(3), 436–437.Google Scholar
  12. Samantara, S. R. (2009). Revisiting the non-farm employment debate—Review of issues and evidence. APRACA, Journal of Rural Finance (A Quarterly Journal of Asia-Pacific Rural and Agricultural Credit Association (APRACA), International Edition), 7(2), 34–39.Google Scholar
  13. Samantara, S. R., & Badatya, K. C. (2000). Agriculture growth and instability. Agriculture Economics Research Association (Conference Issue), pp. 42–46.Google Scholar
  14. Samantara, S. R., & Kulkarni, B. N. (2002). Employment generation through credit linked non-arm activities. Indian Journal of Labour Economics, 45(4), 783–792.Google Scholar
  15. Samantara, S. R. (2012a). Diversification of economic activities under rural non-farm sector. In B. Sen & M. Chinara (Eds.), Economic development and poverty in India (pp. 78–94). New Delhi: New Century Publications.Google Scholar
  16. Samantara, S. R. (2012b). Developmental role of institutional incentives for agricultural marketing in India. Indian Journal of Agricultural Marketing, 23(3), 63–71.Google Scholar
  17. Samantara, S. R. (2015). Financial Inclusion through kisan credit cards in disadvantages region like Arunachal Pradesh—Is there district-level convergence? Indian Journal of Agricultural Economics, 70(3), 217–230.Google Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2017

Authors and Affiliations

  1. 1.National Bank for Agriculture and Rural Development (NABARD)Assam Regional OfficeGuwahatiIndia

Personalised recommendations