An Empirical Analysis of Financial Inclusion and Its Impacts on Small and Marginal Farmers in India

Abstract This study empirically evaluates financial inclusion among India's small and marginal farmers (SMFs) and its influence on agricultural income and production, integrating the most recent government data through 2024-25. An OLS regression with IV/2SLS robustness is performed on 1,500 farm household observations across 15 states using secondary data from NABARD NAFIS 2021-22, RBI Annual Reports 2024-25, PMJDY MIS Portal (August 2025), PMFBY Dashboard, Economic Survey 2024-25, and Union Budget 2025-26 documents. Key statistics include: PMJDY accounts surpassed 56.2 crore; KCC loan disbursal doubled to ₹10.05 lakh crore (7.72 crore farmers); PMFBY paid ₹1.65 lakh crore in claims to 18.52 crore farmers over eight years; and the RBI Financial Inclusion (FI) Index reached 67.0 in March 2025 (up from 43.4 in 2017). Formal credit access (β=0.328), KCC (β=0.291), insurance (β=0.204), and digital banking (β=0.176) all considerably increase farm revenue, according to regression results. An accelerating policy push is indicated by the ₹2.1 lakh crore agriculture allocation, the ₹20 lakh crore agricultural loan objective, and the growth of the Jan Samarth-based KCC in the 2025-2026 Union Budget. However, structural hurdles necessitate focused measures, especially collateral limits (64.7%), insufficient financial literacy (59.3%), and gaps in digital access.