|
The study analyzes institutional financing for the agriculture sector and identifies those factors that are responsible for the overdue among the farmers of Himachal Pradesh. The objective is to examine the factors affecting the overdue among the farmers in the state. The results reveal that in case of marginal farmers, out of the seven selected variables, only four variables—amount borrowed, loaning agency, period of loan and repaying capacity—had a significant relationship with the amount of overdue. In case of small farmers—amount borrowed, loaning agency, period of loan, dependency ratio, repaying capacity and unproductive use of loan affected the overdue. The findings can be successfully applied for the improvement of recovery climate and minimizing the quantum of overdue. The results recommended a more careful scrutiny of the loan applications by the loaning agencies, appropriate policy to monitor credit utilization, conduct of 'Recovery Melas' and prompt efforts for the early recovery of the loan.
Due to peculiarities of agriculture in India, particularly uncertainties, the small scale production, scattered operation and low returns, a large proportion of cultivators cannot manage from one harvest to another without recourse to borrowing (Verma et al., 2000). According to the Food and Agriculture Organization (FAO) report, the farmers in the underdeveloped countries cannot expect the capital needs to be met from savings because their income from farm operations is barely sufficient to provide minimum necessities of life—food, clothing and shelter. Thus, for stimulating the tempo of agriculture production, it is necessary that the farmers be provided with adequate and timely credit(Sadhu et al., 2000). The right type of credit facilitates the use of technology in agriculture and brings an element of healthy competition in farm operations. It turns agriculture into `a way of living' as distinct from `a way of life' (Kumar, 1987). Institutional credit to agriculture in India is disbursed through a multi-agency network consisting of Cooperatives, Commercial and Regional Rural Banks (RRBs). For decades, the cooperatives have been extending credit for seasonal agricultural operations and other purposes in the rural areas. After the nationalization of banks in 1969 and again in 1980, the institutional credit for agriculture has expanded enormously from Rs. 1,865 crore in 1971-72 to Rs. 69,559 crore in 2002-03 (Patil and Balasahib, 2008). With the renewed emphasis by the government on increasing credit flow to agriculture sector, several policy initiatives have been announced in the form of farm credit package, Special Agricultural Credit Plans (SACP) and kisan credit card scheme. The farm package announced in June 2004 to double the flow of institutional credit for agriculture in the ensuing three years has shown very positive results as the total disbursement to the agriculture sector has been increased tremendously from Rs. 125,309 crore in 2004-05 to Rs. 203,296 crore in 2006-07 (Economic survey, 2007-08). It is expected to increase to Rs. 240,000 crore by March 2008.
Agriculture is the main occupation of the people of Himachal Pradesh (HP) and contributes a lot to the state's economy. It provides direct employment to about 69% of the total workforce in the State. About 20% of the total State Domestic Product (SDP) comes from agriculture and its allied sectors. However, it is largely a domain of the small and marginal farmers. According to the census 2001-02, there are 9.14 lac holdings in HP. Out of the total holdings, 7.89 lac are small and marginal holdings accounting for 86.4% of the total holdings. About 1.21 lac (13.2% holdings are owned by the semi-medium and medium farmers and only 0.04 lac (0.4%) belong to the large farmers. The average holding size comes to 1.1 hectares (Economic Survey (HP) 2006-07). The Government of HP is giving consistent support for the development of agriculture sector through various schemes such as Kangra Central Cooperative Bank (KCCB) Scheme, Crop Insurance Scheme, and Macro Management Approach for Agricultural Development. The institutional agencies are playing a pivotal role in developing and strengthening the agricultural base in the rural economy of the state. With the passage of time, to tackle the growing need of agriculture credit in an effective manner, the government assigned the task to main agencies—commercial banks, RRBs and cooperative banks.
Borrowing and indebtedness are the two sides of the same coin. While borrowing is the cause, indebtedness is the effect(Jha and Kumar, 1978). Borrowing is a very common phenomena in the world but the fact is that the Indian farmers find it difficult to repay the debt from their meager income. Thus, indebtedness goes on multiplying year after year(Lekhi et al., 1996). Indebtedness causes loss of property and transfer of land from cultivators to non-cultivators. In other words, it creates a class of landless laborers and tenants in the place of independent farmers(Reddy, 2001). The most gruesome and chilling manifestation of the indebtedness is suicide by the farmers(Gill et al., 2006).On an estimate, at the all India level more than one lac farmers have committed suicides (Assadi and Muzaffar, 2006) and suicides in certain parts of India is a daily occurrence now (Singh, 2006). It has been rightly remarked that indebtedness is the only companion of the farmer from cradle to grave(Sharma et al., 1978). Researchers have highlighted the diversion of credit, frequent failure of crops, unremunerative prices, political interference, willful default as the major determinants of overdue among the farmers (Verma and Reddy, 2001; Das and Debabrata, 2001; Mathur, 2001; Dayanandan, 2004; Assadi and Muzaffar 2006; Mitra et al., 2007 and Patil, 2008). |
