Agriculture is the backbone of the Indian economy. Over 50% of the workforce is engaged in the agricultural sector, and at least 14% of India's GDP emanates from the farm sector. The present study aims to assess the technical efficiency of paddy farmers in the two districts of West Bengal (Purba Bardhaman and Purulia) and to examine the effect of financial literacy (FL) on their technical efficiency.
Data on 503 farmers (260 from Purba Bardhaman and 243 from Purulia) were collected through a primary survey. S&P Global Fin_Lit questions were used to measure the FL amongst the sample farmers. The stochastic frontier model was employed to examine the effect of FL on farmers’ technical efficiency.
The study's results showed that the average efficiency level of Paddy farmers was high (94.04%). The study's outcome showed that different dimensions of FL played an instrumental role in reducing the inefficiency levels of the paddy farmers. In addition, age, location of the farmers, land-holding size, agricultural income, farming experience, and the distance of the farmland from the farmer's house significantly affected the efficiency of the paddy farmers.
Very few studies have assessed the effect of FL on farmers’ technical efficiency. To the best of our knowledge, this is the first attempt, especially in the Indian context, to examine the effect of FL on farmers’ efficiency.
