Assessing the role of government-led microcredit

Survey data collected in 2007 from three districts in Andhra Pradesh, this article assesses the performance of 72 primary agricultural credit cooperatives. It finds that these credit cooperatives tend to be used as political instruments and, as a result, borrowers prioritise all debt obligations to microfinance institutions, informal moneylenders and others, before primary agricultural credit cooperatives. The authors suggest that if the performance of these credit cooperatives does not improve, a larger government role in the supply of credit may undermine the culture of repayment.