Performance and Functional Working of Primary Agricultural Credit Societies in Karnataka: An Analytical Study

Dr.G.Lohith

Associate Professor of Economics

Government First Grade College, Magadi, Bengaluru

Email: lohith611@gmsil.com

Abstract

            PACS have emerged as important grassroots institutions for promoting agricultural credit and rural development in Karnataka. They play a significant role in mobilising rural savings, providing institutional credit, supplying agricultural inputs, supporting allied activities, and delivering financial services to farmers. The present study examines their performance, functional working, and contribution to agricultural development based on indicators such as functioning PACS, membership, deposits, loans and advances, and loan recovery. The exponential growth model indicates a significant upward trend in the functioning, membership, and deposit mobilisation of PACS, highlighting their growing importance in Karnataka’s institutional agricultural credit system. Strengthening their financial viability, governance, digital capacity, and service diversification is essential for sustainable agricultural development.

            The number of functioning PACS recorded an R² value of 0.938, indicating that 93.8% of the variation was explained by the time trend. The model was statistically significant (F = 121.326; p < 0.001), with a positive growth coefficient (b₁ = 0.013), indicating an estimated annual exponential growth rate of 1.31%. Similarly, PACS membership exhibited a strong positive trend, with an R² value of 0.971, indicating that 97.1% of the variation was explained by the time trend. The model was statistically significant (F = 264.914; p < 0.001), and the positive coefficient (b₁ = 0.029) indicates an estimated annual growth rate of 2.94%. The total deposits recorded the highest growth performance among the three indicators. The model produced an R² value of 0.999, indicating that 99.9% of the variation in deposits was explained by the time trend. The model was highly significant (F = 11,568.914; p < 0.001), while the positive growth coefficient (b₁ = 0.098) indicates an estimated annual exponential growth rate of approximately 10.29%.

Keywords: Performance, Functioning,   Total Deposits Total Loans & Advances and Average Loan Recovery Rate