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Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries

2021-01-20 Working Paper Series
HKUST CEP Working Paper No.2021-05

Photo by Nandhu Kumar on Unsplash

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We conduct a field experiment in India comparing two approaches to appointing a local commission agent to select eligible smallholder farmers for a subsidized credit program: a private trader in TRAIL, versus a political appointee in GRAIL. Although both schemes had similar loan take-up and repayments and similar treatment impacts on borrowing and farm output, only TRAIL raised farm profits significantly. This cannot be explained by greater connectedness between TRAIL agents and farmers, or differential patterns of borrower selection. Instead, TRAIL agents increased their interactions with treated farmers, and we argue this helped them procure inputs at lower prices.

Author
Sujata Visaria (On Leave)
Sujata Visaria (On Leave)
Associate Director, Center for Economic Policy
Associate Professor, Department of Economics
Sujata Visaria is a development economist and Associate Professor in the Department of Economics at…
Pushkar Maitra
Monash University
Sandip Mitra
Sampling and Official Statistics Unit, Indian Statistical Institute
Dilip Mookherjee
Boston University
Topics
Development
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