Role of Institutions and Support Systems in Promoting Organic Farming - A Case of Organic Producer Groups in India

Abstract

The Pradhan Mantri Jan Dhan Yojana (Prime Minister People Money Scheme) created a record opening up of bank accounts in India in a very short span. The utility of the bank accounts is great for the financial inclusion and which was demonstrated across India in various ways. However, there are some concerns on the utilization of the bank accounts, as some studies pointing out the dormant bank accounts and overburden on the banking system with large number of accounts with little or no transaction for a longer period. There is also a case of using the wide post office network for the financial inclusion, which are reachable to every villager without any cost to government as well as the beneficiaries. This study focuses on the utilization pattern of the post office and bank accounts in India by using the Global Findex data collected by the World Bank in year 2011 and draw some lessons on how to increase utility of the bank accounts to general public without excessively burdening the banking system. The sample drawn is nationally representative with the sample size of 3518 adult members 1837 male and 1679 female. We find that post offices are relatively more likely than traditional banks to provide accounts to individuals who are most likely to be financially excluded such as the poor, less educated and those out of the labor force. Even though over all use of the bank accounts is low, they play a greater role in increasing savings habits and likely to play a greater role in direct cash transfer under different government welfare programs.

Keywords: institutional economics, agriculture, organic farming, India

JEL Classification: Q13, P32, N55