Marginal and small farm sizes constitute more than 85% of the operational holdings in India. Several concerns regarding the sustainability, efficiency, access to formal sources of credit and the scale neutrality of such credit plague the smallholders. This study finds that the smallholders are efficient but the returns to them are woefully low, which threatens their sustainability. Further, the smallholders have to rely more on non-institutional sources for their credit requirement and often with a greater interest burden. In addition, the credit provided by formal sources is not scale-neutral. This posits a difficulty for policy praxis, which must urgently address these issues plaguing the smallholders.
