Access to Digital Services and Its Impact on Farm Income: Empirical Evidence from Eastern India

Digitalization in the agriculture sector of lower-middle income nations acts as a stepping stone to improve efficiency, productivity and profitability of this sector by enabling farmers’ access to crucial information on prices, weather-based agro-advisory and extension services. This study concentrated on the access of digital technologies to the farmers of Eastern India and their impact on the income level. Primary data were collected from 3,375 farmers from 34 districts of five states, namely Bihar, Uttar Pradesh (East), Jharkhand, Odisha and West Bengal. Our findings highlighted the importance of better education, proportion of peers using these technologies within the village, access to credit via the government’s Kisan Credit Card scheme in enabling access to online digital services of UPI/net banking and those related to agriculture. Using two-stage least squares instrumental variable regression, we found that these services have a significant positive effect on per-acre agricultural income. However, there is a disparity in access to these technologies across farm sizes, and marginal farmers lag in the digitalization process. Policies promoting education, particularly digital and financial literacy in schools, could address critical barriers. Additionally, easier access to credit could help farmers invest in smart devices once they understand their benefits. Furthermore, the availability of agro-advisory services in local languages could enhance the familiarity and accessibility of these digital services among the farmers. There should be a strengthened policy framework to improve capacity-building for Indian farmers to adopt and utilize these digital services to boost the performance of the agriculture sector. JEL Classification: O13, Q10, Q16, R20