Effect of financial literacy and financial confidence on the financial discipline of farmers: evidence from West Bengal, India

Financial discipline is of paramount importance in our daily lives for effective financial outcomes. It is also highly intertwined with financial well-being (French and McKillop, 2016). Disciplined financial behaviour includes budgeting, making notes of expenditures on a day-to-day basis, control of expenses etc. (Kamath et al., 2008). Therefore, financial discipline can be judged based on their habit of preparing budgets and tracking and controlling expenditures (French and McKillop, 2016). Budgeting means planning ahead of the expected/desired expenditure, which can be used for exercising later. According to Lukas and Howard (2023), “Budgeting is a practical and effective way for the consumer to manage their money and improve their well-being”. Budgets are prepared for estimating future expenditures based on past expenditures (Lukas and Howard, 2023). People prepare household budgets after dividing their expenditures under different categories which provides an effective estimate of the total expenditure from each segment (Smits and Günther, 2018; Galperti, 2019; Zhang et al., 2022). Keeping track of income and expenditure helps individuals comply with the tax rules and regulations (Moran, 2009). Evaluation of a financial diary enables financial experts/advisors to understand a person’s spending pattern, risk attitudes, savings and borrowing behaviour, which allows them to recommend suitable products and services to the client (Islam et al., 2023; Molla and Maji, 2025). Whitside (2024) opines that 50% of the total income can be spent on necessities, 30% of the total income may be utilized for discretionary purposes and the remaining 20% of the total income should be saved in different financial products. On the other hand, tracking of expenditure is associated with recording all the income and expenditure regularly, which acts as the basis for controlling the expenditure by tracking on a day-to-day basis by comparing with the budget (Zhang and Sussman, 2024; Xiao and O'Neill, 2018; Zhang et al., 2022; Maji and Laha, 2022a, 2022b, 2023). This process of preparing a budget and keeping track of all the expenditures is observed to be extremely useful in controlling discretionary spending and improving the saving behaviour among individuals vis-à-vis households (Lukas and Howard, 2023). In addition to the various socio-economic characteristics of the individuals (Xiao and O'Neill, 2018), research studies have shown that both subjective and objective financial literacy (FL) plays a catalytic role in inducing financial discipline amongst individuals (Phung, 2023). FL can be comprehended as the cognitive ability of people to understand fundamental financial matters such as numeracy, time value of money, power of compounding and inflation, which injects financial discipline amongst individuals (Kidwell et al., 2003; Hossain and Maji, 2021). For example, people with an understanding of the power of compounding and the time value of money are expected to save consistently possibly in financial instruments such as systematic investment plans than their counterparts who have limited or no knowledge in these issues. People with higher levels of financial discipline are likely to have lower levels of financial stress and higher levels of financial satisfaction. In addition, people with financial discipline have lower consumer debt. They are more likely to have an account in formal financial institutions, and accumulate greater financial wealth over time (French and McKillop, 2016).

India is an agricultural-centric country, where majority of the people (more than 50%) are engaged in the agricultural sector. More than 14% of the GDP comes from the agricultural sectors. India is one of the top three producers of various agricultural commodities such as paddy, wheat and groundnut etc. However, the Indian farmers are facing multiple challenges such as the low price of the agro-commodities, increasing prices of the agricultural inputs, absence of proper marketing channels, inadequate irrigation infrastructure, asymmetric information and lack of awareness of innovative methods of farming (Goyal et al., 2016). Empirical studies show that farmers have very poor level of FL (Maji and Laha, 2022a,b). Due to the poor level of FL, farmers are engaged in undesirable financial behaviour (Das and Maji, 2023b). Maintaining financial discipline is very important for farmers. Budgeting and tracking of agricultural expenditures can be immensely effective in setting prices for the products and calculating actual profit from selling these products. With more information available from the financial diary, farmers can make better decisions about whether farming a particular commodity can be profitable in the future or not. Proper record keeping can enable farmers to compare their performance with other farmers (Moran, 2009), which makes them competitive. Good financial discipline is even more beneficial for livestock farmers as the farmers, with the help of a financial diary, can estimate the actual cost and income from livestock farming and prepare an economic feeding strategy for the livestock ^[1]. Most of the farmers have been observed not to record all the financial transactions due to a poor understanding of the expected benefits of maintaining a financial diary, owing to a lack of adequate FL. Many of the farmers opine that they have less free time available to maintain a financial diary and others think that it is a waste of time. Keeping this issue in context and the importance of FL in improving financial discipline, the present study seeks to explore the financial discipline amongst the farmers from West Bengal, India. An effort is also made to examine the implications of both subjective and objective FL on financial discipline amongst the sample farmers. Moreover, instead of using the objective FL alone, subjective FL have also been taken into account, which makes this study distinct from other studies.

The broad literature to which this issue pertains is the effect of FL on the financial behaviour of the individuals. For example, Khawar and Sarwar (2021) observed that FL positively affects financial behaviour through financial socialization. Not only objective FL but subjective FL and financial education affects financial behaviour positively both in short term as well as long term (Kim et al., 2019). People with higher levels of FL, specifically knowledge of advanced financial concepts, are open to obtaining advises from financial advisors. It enables them in investing in the capital market and risky asset classes either directly or indirectly to earn higher returns than their counterparts (Li et al., 2020). Retirement planning is more evident among individuals with a greater level of FL. More specifically, individuals with the understanding of risk diversification concepts are found to be readily prepared for retirement (Sekita, 2011). Individuals with greater FL are less likely to withdraw their money before the maturity for any investment (Preston, 2022). Both objective and subjective FL positively affect short-term and long-term financial behaviours. However, the effect of subjective FL is observed to be stronger on long-term financial behaviour (Henger and Cude, 2016) than that of the objective FL. Lack of self-control is at the centre of the present bias which can be used to explain behavioural issues such as addiction, overconsumption and inadequate savings etc. among individuals. This time-inconsistent behaviour is triggered by the tendency of people to discount the present reward heavily in contrast to the future reward. However research studies have shown that possession of FL can be helpful in reducing this bias which can improve financial behaviour which can positively affect desirable investment behaviour. The favourable effect of FL and FC on money management behaviour was observed in respect of the Indian farmers (Das and Maji, 2023b). People with low level FL are more prone to have higher debt and low savings which lead them to a debt trap. Apart from objective and subjective FL, different demographic, socio-economic, psycho-analytical variables such as age, gender, marital status, economic status, financial advisory assistance, financial attitude, perceived control, trust on the financial institutions affect the financial behaviour favourably (French and McKillop, 2016; Onofrei et al., 2022).

As far as the effect of FL on financial behaviours of farmers is concerned, it has been observed that FL significantly improves the financial behaviour of sugarcane farmers. Farmers with higher levels of FL are more likely to have accounts in formal financial institutions, make regular savings through proper financial planning, borrow money from formal financial institutions (Khadka and Thapa, 2024) and adopt crop insurance (Gunawardhana and Silva, 2021). Deyshappriya et al. (2024) in their study observed that FL significantly improves the loan repayment behaviour among farmers. Liu et al. (2023) argue that it is not only crop insurance but propensity to adopt health insurance is also more for farmers with greater FL. Such probability further increases in case the farmer is young, female and having a higher education. It has been found that financially literate farmers are more open to obtaining credit from digital or fin-tech platforms, further improving their efficiency (Sarfo et al., 2023). Twumasi et al. (2021) observed a non-linear relationship between FL and access to financial services, and the effects are higher specifically for male and higher-educated farmers. Farmers with higher levels of FL are more likely to productively utilize the borrowed funds and less likely to default on their credit (Chakraborty and Gupta, 2023). In the context of Indian farmers, FL and FC were both observed to be positively affecting savings behaviour (Das and Maji, 2023a,b).

The habit of preparing budgets significantly reduces the self-control problem among individuals and thereby empowers them to be future-oriented and avoid present bias (Bai, 2023). Budgeting and tracking income-expenditure significantly affect the consumption behaviour of people and also reduce impulsive buying behaviour (Galperti, 2019; Lukas and Howard, 2023). This positive habit of maintaining a financial diary is extremely useful during financial hardships and helps to control expenditures. Preparing budgets and following them strictly enables the achievement of long-term and short-term financial goals (Xiao and O'Neill, 2018; Galperti, 2019). Household budgets can significantly improve the financial resilience of any household. Budgeting acts as a controlling mechanism whenever any of the actual expenditures exceeds the budgeted one (Ülkümen et al., 2008). Moreover, budgeting and tracking of expenditures reduces the pain of payment as everything is well-planned, tracked and controlled. Financial discipline significantly reduces undesirable financial behaviour and improves the money management behaviour of people (Kidwell et al., 2003).

Exploration of the extant scholarship highlights the scanty number of research studies available in the extant scholarship that assess the implications of FL and FC on the financial discipline in general and specifically for farmers. The present study makes an original effort to address this research gap.

Keeping the research gap in mind, the specific objectives of the present study are as follows:

1. To highlight the financial discipline, FL and FC amongst the farmers in West Bengal, India.

2. To unfold the effect of FL and FC on the financial discipline amongst the farmers from West Bengal, India.

This study is predominantly analytical in nature and based on primary data. This study is carried out in the context of two different districts ^[2] in West Bengal, Bardhaman and Purulia. Historically Bardhaman district is considered to be an agriculturally advanced district. This district used to be known as the “rice bowl of Bengal” because of the huge production of Aman rice due to favourable agro-climatic weather conditions. On the other hand, the agro-climatic condition in Purulia districts is adverse, which results in poor production of Aman rice. Existing literature has shown that financial inclusion plays a crucial role in increasing the FL in a region through the learning-by-doing effect. This study selects the two districts not only based on agricultural productivity but also based on the access-based financial inclusion status in the districts. Access-based financial inclusion was measured by the number of bank branches in each of the districts per thousand square kms. The data on the number of bank branches were collected from the Reserve Bank of India website. The average number of bank branches per thousand square kms in West Bengal as a whole, Bardhaman and Purulia were 0.0961 ^[3], 0.1647 ^[4] and 0.0263, ^[5] respectively. One district above the state average in terms of access-based financial inclusion, that is Bardhaman and another district below the state average with respect to access-based financial inclusion were selected in the study. Therefore, both based on agricultural productivity and financial inclusion these two districts were selected for the study purpose. Multistage random sampling procedures were employed to select the sub-divisions, sample blocks, villages and households from both the districts. From Bardhaman district, Kalna II and Purbasthali I were selected and Purulia I and Purulia II were selected from the Purulia district. Selection of the blocks was based on the productivity of Aman rice. A total number of 505 farmers (260 from Bardhaman and 245 from Purulia) rice farmers were selected for the study. The survey was carried out during July 2023 to December 2023.

This study has used the widely popular Standard & Poor (S&P) questionnaire to measure the FL among the farmers. This set of questions are frequently used by FL scholars in developed as well as developing countries (Lusardi and Mitchell, 2014). There are a total of five multiple answer types of questions (on numeracy, inflation, time value of money and risk diversification) in the questionnaire. If the respondents can correctly answer any question, then they get 1 mark and 0 is awarded for every incorrect response. Therefore, the range of FL score that the respondents can obtain lies within 0–5.

Assessing the effect of FL on financial behaviour remains incomplete and biased without considering the implications of subjective FL or financial confidence (FC). Therefore, to minimize the bias, both objective and subjective FL should be considered together. To ascertain the subjective FL, respondents were asked “How you would rate your overall knowledge about financial matters compared with other farmers?” which can be responded in terms of the Likert scale where 1 demonstrates very low FC whereas 5 indicates high levels of FC.

There are a number of ways to determine financial discipline. In this study, to ascertain the financial discipline of the farmer, the respondents were asked “Do you prepare budget, make regular notes, track and control your personal spending?” A “Yes” answer implies financial discipline, it is denoted as 1 otherwise 0.

As the dependent variable, that is financial discipline is dichotomous in nature which can take only two values (either 1 or 0), binary probit regression was used for assessing the impact of FL and FC on the financial discipline of farmers. Following the binary probit regression, various types of diagnostics test are required to be performed to assess its technical suitability. In ensuring that, Link test (model specification test), Hosmer–Lemeshow (HL) test (goodness of fit) and multicollinearity (collinearity test) were performed. Moreover ROC curve was ascertained to check the diagnostic ability of the binary classifier.

Following empirical model was used in the study:

$λiarethecoefficientsandφiistheerrorterm.$ The detailed description of the variables is presented in Table A.1 in Appendix

Table 1 provides the demographic and socio-economic profile of the sample farmers. Of the total sample, 51.49% of farmers were from Bardhaman and the rest were from Purulia. Out of the total farmers, 29.11% of the farmers were from the general caste, 44.55% of the farmers were from other backward castes, 23.56% of the farmers were from scheduled caste (SC) and the remaining 2.56% farmers were from the scheduled tribe caste. Farming activities were found to be primarily dominated (87.72%) by the males. The analysis of the data reveals that 7.52%, 13.86%, 17.82%, 26.73% and 22.38% of the sample farmers belong to the age cohort of 15–25, 26–35, 36–45, 46–55, 56–65 respectively. Remaining (11.68%) farmers were aged more than 65. As far as the income levels of the farmers are concerned, 46.34% of the sample farmers had agricultural income less than Rs. 50,000 and 43.73% of farmer’s agricultural income was found to be lying between Rs. 50,000 and Rs.100,000. Merely 9.9% of farmers were observed to earn agricultural income above Rs. 100,000.

Based on the land holding size of the farmers, majority of the farmers were observed to be marginal (40.59% having less than 1 hectare of operational land) and small farmers (43.17% have 1–2 hectares of operational land). The household size of the majority (62.97%) of the farmers was less than 5.80% of the sample farmers who did not face any kind of health shocks in the last year. As far as educational qualification is concerned, 34.65% of farmers had only primary education, 24.36% of farmers had upper primary education, 22.77% of farmers had secondary education, 11.09% of farmers had higher secondary education and only 7.13% of farmers had higher education. As far as the risk appetite is concerned, the majority of farmers (88.12%) believed themselves to be risk-averse.

Table 2 highlights the pattern of FL, FC and financial discipline of the sample farmers. As far as the understanding of risk diversification is concerned, 44.62 and 40.16% of farmers from Bardhaman and Purulia, respectively provided the correct answer. Similarly, 45.77% of the farmers from Bardhaman and 32.24% of the farmers from Purulia provided the right answers to the inflation-related questions. The numeracy of the sample farmers was found to be relatively better in comparison to the performance of the respondents in respect of other FL dimensions. Nearly 50% of respondents in aggregate could provide correct responses in respect of the numeracy question. The understanding of the sample farmers in respect of the time-value-of-money dimension was observed to be extremely poor in respect of the entire sample and especially for farmers from Purulia district. Approximately 75% of farmers in aggregate failed to understand the effect of the time value of money. Only about 15% of the farmers from Purulia could correctly answer the two questions relating to compounding. The average FL score of the farmers belonging to Bardhaman was found to be slightly better (2.08) than that of the farmers of Purulia (1.48).

However, the overall performance of the farmers in respect of the FL was found to be very poor as indicated by the aggregate FL score of merely 1.80 out of five. The poor FL among the sample farmers is also evident from the fact that 65.15% of the total respondents (74.69% of Purulia and 56.54% of Bardhaman) were found to be lying under the poor FL category. Only 18.42 and 16.44% of the sample farmers were observed to possess a high level of FL. Of the total sample, 29.31% (33.85% from Bardhaman and 24.49% from Purulia) of the farmers were found to be financially confident (in terms of subjective FL). Only 32.87% of the farmers were found to be financially disciplined. The low FL, FC and financial discipline signifies the interrelatedness amongst these factors.

The effect of the objective FL and subjective FL, that is FC on financial discipline, is explored using binary logit model and highlighted in Table 2. The outcome of the study indicates that farmers with adequate FL are more likely to be financially disciplined as compared to those with low levels of FL. This finding is in line with the existing theoretical belief. Individuals with higher levels of FL understand the importance of financial discipline, have definite financial goals and know how to plan their income and expenditure. They are better prepared to achieve these financial goals by preparing and strictly following household budgets (Smits and Günther, 2018). FL is an essential component for developing an effective financial budget. To maintain timely payment of loans and other expenses, farmers regularly maintain a financial diary to control unnecessary and impulsive expenditures (Lukas and Howard, 2023). Financial discipline aids effective financial decision-making even amongst students (Phung, 2023).

The result of the study showed that farmers with higher levels of FC are more likely to be financially disciplined. FC enables individuals to make effective financial decisions by regularly following financial budgets and tracking their financial affairs strictly (Das and Maji, 2023b). It is found that individuals with higher levels of FC have a good understanding of current financial situations. They tend to be better focused towards the different financial goals which can be better achieved by becoming financially disciplined. Financially confident individuals understand the importance of maintaining records and tracking them as it also helps them to estimate future income and expenditure for the households (Henager and Cude, 2016). Financially confident individuals in the household are generally in charge of the household financial affairs (Ülkümen et al., 2008). On the other hand, individuals with low FC do not maintain and follow financial budgets, resulting in the presence of higher levels of financial anxiety.

Although the participation of women in agricultural activities is less than that of men, the result of the study indicates that women farmers were more financially disciplined than the male farmers. In Indian culture, men are considered to have the primary responsibility of earning, whereas the household affairs are normally taken care of by the women members of the family (though this stereotyped gender role cannot be supported and is changing fast in the Indian society). Indian women are very efficient in making budgets, making notes of day-to-day expenditures and tracking the expenditure so that they do not overshoot the budget (Kamath and Dattasharma, 2017; Smits and Günther, 2018; Islam et al., 2023). The majority of Indian women are housewives or part-time workers, which allows them to devote more time to household affairs, including financial affairs, which enables them to be more financially disciplined. Therefore, carefully recording of financial transactions helps them to curb discretionary and impulsive expenditure.

The results of the study indicate that agricultural income and off-farm income positively affect the financial discipline of the sample of Indian farmers. It means that farmers who have higher levels of income are more likely to be financially disciplined. Extant literature also shows that individuals with higher levels of income generally have higher levels of FL and FC which helps them to understand the importance of budgeting (Lusardi and Mitchell, 2014). Moreover, individuals with relatively greater FL and FC followed by relatively higher income consider the financial advices from professional advisors which indirectly makes them financially disciplined. Smits and Günther (2018) argue that farmers with higher levels of income normally hold large land holdings, which allows them to diversify into more crops. For determination of profit from individual corps, proper financial diary maintenance is essential and thus the farmers with large holdings are required to be financially disciplined. Moreover, farmers with higher levels of income are also required to make large agricultural investments. Achieving these financial goals warrants the farmers to be disciplined and regularly track and control their unnecessary expenditures.

The result of the study revealed that household size negatively affects the financial discipline of the farmers. As the household size increases, the frequency of different financial transactions (grocery, school, utility and other expenditures) enhances a lot, especially in poor households, which makes it cumbersome to maintain the record of all the transactions which adversely affects their financial discipline. In addition, household members have diverse spending habits, leading them to spend their money in different categories. Recording all these transactions with appropriate classification requires a lot of time and effort. The mental cost of recording and maintaining financial records exceeds it benefit, which discourages them from becoming financially disciplined. Kidwell et al. (2003) opine that the majority of the household members feel very uncomfortable sharing all income and expenditures with other family members. This is one of the major impediments that prevent the members from making regular financial records. Moreover, the financial diary is mainly assumed to be prepared for long-term financial planning purposes. However, when household size increases, individual members are more concerned with short-term planning purposes which adversely affects financial discipline (Brounen et al., 2016).

The outcome of the study reveals that older farmers are less financial financially disciplined as compared to the younger farmers. Old people have lower financial obligations as compared to the younger ones, so the aged farmers are less interested in keeping, maintaining and tracking expenditures (Kohli et al., 2017). In addition, the memory and cognitive ability of individuals declines with age. Therefore, it is very difficult for them to recall all the transactions to make proper notes (Finke et al., 2017). Moreover, people in old age are more concerned about their health-related problems than financial issues. These factors cumulatively contribute towards the relatively less financial discipline amongst the old age farmers in the study.

It is generally observed that the FL amongst the individuals belonging to the agriculturally advanced districts is better which allows them to comprehend the benefits of being financially disciplined (Phung, 2023). The availability of different financial products and services, greater income and job opportunities, off-farm income opportunities and educational attainment are better available in agriculturally advanced districts. Such facilities allow the farmers to participate in the financial transactions that prompt the farmers residing in agriculturally advanced districts to keep, maintain and track different financial transactions (Smits and Günther, 2018). In agriculturally advanced districts, the cost of living is also found to be higher which requires them to be financially disciplined to control expenditure (Kamath et al., 2008; Galperti, 2019; Lukas and Howard, 2023).

The outcome of the study also suggested that farmers with higher levels of farming experience are observed to be financially disciplined as compared to farmers with lower farming experience. Experienced farmers want to maximize their agricultural efficiency through minimization of cost. Such a minimization of cost requires regular maintenance of financial records by becoming financially disciplined. Moreover, farmers always face various types of shocks such as price shocks, weather shocks and productivity shocks. Experienced farmers are well aware of these types of shocks and better equipped through financial discipline to tackle contingent situations.

Different diagnostic tests have also been carried out to ensure that the estimation is correct and unbiased. The model specification test is mainly used for evaluating the effectiveness of the independent variables considered in the model. If inappropriate variables are chosen, specification error will occur and will produce biased results. Therefore, to check the correctness of the model specification, Link test was conducted after estimating the binary probit regression. The result of the Link test was found to be statistically significant which indicates that the model is correctly specified. In the Link test “hat” value must be significant, and “hatsq” value must be insignificant. The p-value associated with “hat” is 0.000, and “hatsq” was noticed to be 0.570 implying that the model is well-specified ^[6].

Goodness of fit determines whether the variable comes from a specified distribution or not, that is whether the data fully represent the true populations or not. In other words, whether the actual value is closely linked to estimated value or not. When the difference between the actual value and the estimated value is lower, then the model is considered good. There are various ways to determine the goodness of fit of the model, such as the Chi-Square test, Kolmogorov–Smirnov test and the HL test. The HL test shows how effectively observed data fit into the logistic regression model. The HL test statistics was found to be statistically insignificant (0.2304) which signifies that the model is a good fit.

To determine the sensitivity and specificity of the model the ROC curve was estimated. The ROC curve is a graphical tool that is used in binary outcomes to see how the model can distinguish between true positives against false positives. This means this test assesses whether the model correctly classifies positive as positive and negative as negative. The value of the ROC curve lies between 0 and 1. If the value of the model lies close to 0.5, then the model has low predictive power, whereas if the value of the model is close to 1 then the model has high predictive power. The value of the area under ROC curve was observed to be 0.8536, indicating the superior performance of the model in discriminating between positive and negative classes.

Financial discipline is one of the most important prerequisites for financial well-being. Recording, maintaining and tracking financial transactions gives a clear picture of income, expenditure, financial behaviour and financial conditions of an individual throughout the year. From the farmers' point of view, a financial diary can help them in preparing a financial budget and make effective financial plans for farming. It will help them to allocate their resources optimally to achieve maximum output. Considering the importance of FL and FC in promoting sound financial behaviours, it is postulated that improvement in FL and FC can lead to greater financial discipline amongst the farmers. In this prelude, the present study seeks to assess the FL, FC and financial discipline among the farmers in West Bengal and also to assess the effect of FL and FC on the financial discipline of the farmers in West Bengal. FL, FC and financial discipline were found to be very low amongst the sample farmers in the study. District-wise analysis reveals that only 45% of farmers from Bardhaman and 20% of farmers from Purulia were financially disciplined. The state of objective FL was also found to be very poor. The average FL scores of farmers belonging to Bardhaman and Purulia were 2.08 and 1.48 respectively. The outcome of the study unequivocally reiterated that both objective FL and subjective FL, that is FC, significantly improve financial discipline amongst the sample farmers. Age of the farmers, gender, household size, agricultural income, off-farm income farming experience and area of residence were also observed to exert a notable effect on the financial discipline of the farmers.

As it has been found that financially literate farmers are financially disciplined, concerted efforts and targeted policies focusing on improving the objective FL of farmers should be taken to improve financial discipline. The government should formulate an effective financial education policy that improves not only their financial knowledge but also their financial awareness levels, which helps them make effective financial decisions. The government should organize various finance-related workshops in regional languages. Adequate financial training should be imparted amongst the farmers so that they can understand the benefits associated with budgeting, recording and tracking all financial transactions. Once the objective FL improves and farmers start recording financial transactions properly and begin participating in financial transactions through financial institutions, their FC will also increase, which will again positively affect financial discipline.

Nowadays, a smartphone plays a crucial role in improving the FL of farmers by providing various finance-related information and services at any time at any place. With the help of smartphones, farmers can now access various financial products such as digital wallets and mobile banking apps. Using these products significantly improves their financial knowledge via learning by doing which also requires improvement in their digital literacy.

The findings of the study unequivocally suggested that not only FL but also FC is also important to ensure financial discipline. Targeted financial education policies that not only focus on FL but also improve FC should be pursued. Community-specific tailored real-life-based education campaigns and experiential learning keeping in mind the demographic factors to make people aware of their true financial ability can help them to improve FC. Setting financial goals should be promoted amongst the Indian farmers, which will encourage them to be financially disciplined. Farmers should be trained to diversify their income by focusing also on off-farm income which will not only reduce their financial burden but will also be helpful improving farming activities with more resources. The habit of regularly recording all the financial transactions at a specific time in a day should be encouraged among the farmers. Recording of all financial transactions should be flexible rather than rigid, which will allow the farmers to record all the financial transactions in their way rather than by following a standardized method as developing the habit is more important here. Educational attainment was observed to enhance financial discipline amongst the farmers. Therefore, policymakers should take appropriate steps to increase the enrolment among the farmers in primary and secondary education through lifelong learning centres.

The study is based on only two districts in West Bengal. Therefore, it lacks generalization. If the study can be carried out on a large scale by including farmers from other districts of the state, the results will be effective.

The questionnaire used in this study was mainly closed-ended in nature, which restricts the respondents to describe their perception. Considerations of perceptions can offer important cues in understanding behaviour or decision-making activity. Therefore, future studies must also include attitude and perception-related questions to properly understand the underlying causes of any financial behaviour.

The major portion of the study relies on a primary survey which can suffer from non-response bias, selection bias, attrition bias and recalling bias, etc. Therefore, future studies should take care of these biases.

The supplementary material for this article can be found online.