Institutional Factors

1. Fragmented Landholdings

• The average size of landholdings in India is quite small, with many farmers owning small, fragmented plots of land.
• This fragmentation of landholdings, often resulting from the division of land among family members over generations, makes it difficult for farmers to achieve economies of scale.
• Small and fragmented landholdings limit the ability of farmers to adopt modern farming techniques, mechanize their operations, and access credit and other institutional support.
• The lack of consolidated landholdings reduces the overall efficiency and productivity of the agricultural sector.

2. Lack of Capital and Credit Facilities

• Many Indian farmers, especially small and marginal farmers, lack access to adequate capital and credit facilities to invest in their agricultural activities.
• The limited availability of institutional credit, such as from banks and cooperative societies, forces farmers to rely on high-interest loans from informal sources, such as moneylenders.
• The lack of capital and credit restricts the ability of farmers to purchase modern inputs, invest in irrigation infrastructure, or adopt new technologies, thereby hindering agricultural development.
• The dependence on informal credit sources and the resulting indebtedness of farmers can further exacerbate their economic difficulties.

The Indian agricultural sector faces a range of challenges, including natural factors, technological limitations, institutional constraints, economic pressures, and social barriers. These factors have collectively impeded the transformation and sustainable development of the agricultural landscape in the country.