[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

REIMAGINING INDIA
was lowest in STs and second lowest in
SCs. OBCs reported higher spread of
indebtedness and amount of loan than
SCs but lower spread and higher amount
of loan than general category of
social group.
State wise distribution of farmers’ indebtedness
suggests that Andhra
Pradesh registered highest incidence of
debts with 82 percent followed by Tamil
Nadu (74.5 percent), Punjab (65.4 percent),
Kerala (64.4 percent) and Karnataka
(61.6 percent). Uttaranchal reported
lowest percentage of farmers with
loan. In terms of per farmer amount of
loan, Punjab carried the highest burden
of loan amount at Rs.41,576 followed by
Kerala (33,907). Haryana stood at third
with Rs.26,007 followed by Andhra
Pradesh (Rs.23,965), Tamil Nadu
(Rs.23,963), Rajasthan (Rs.18,372),
Karnataka (Rs.18,135) and Maharashrtra
(Rs.16,973). Among social groups of
STs, per farmer loan amount was highest
in Punjab (Rs.1,18,495), followed by
Haryana (Rs.23,555), Tamil Nadu
(Rs.21,023) and Andhra Pradesh
(Rs.12,760). In case of SCs, per farmer
loan amount was highest in Rajasthan
(Rs.16,708) followed by Haryana
(Rs.13,341), Kerala (Rs.13308), Tamil
Nadu 12,786 and Andhra Pradesh
(Rs.12,720). For OBCs per farmer loan
amount was highest in Kerala
(Rs.33,116), followed by Tamil Nadu
(Rs.27,355), Haryana (Rs.26,226),
Andhra Pradesh (Rs.23,697), and Rajasthan
(Rs.22,009). In general category
also per farmer loan amount was highest
in Kerala (Rs.38,013) followed by
Andhra Pradesh (Rs.37,802), Haryana
(Rs.31,548), Gujarat, Karnataka and
Tamil Nadu.
Amount of loan taken was generally
utilized for production and consumption
purposes. Data suggest that 30.6 percent
of loan amount was spent for capital expenditure
in farm business followed by
current capital expenditure (27.8 percent).
Non-farm business consumed 6.7
percent. Thus, altogether 65 percent
loan amount was directly used for production
purposes. Another 15 percent
was spent for social development and
remaining 20 percent was on marriage
and other ceremonial occasions and on
consumption expenditure. Medical
treatment and other expenditure could
eat significant proportion in some of
Near landless and marginal households took 56.7 % and
47.2 % of loan amount respectively from informal usury
networks. State wise variations suggest that non-institutional
share of loan fi nance was higher in many states
the states.
Rural credit market has both formal
and informal players. Formal players are
government, cooperatives, commercial
banks, whereas informal credit market
is run by and large by moneylenders - often
farmer, traders including dealers of
inputs, other professionals, friends and
relatives, and others operate as moneylenders.
NSS data suggest that commercial
banks remained major player in providing
credit to farmers (35.6 percent)
followed by cooperatives (19.6 percent)
and government (2.5 percent). Altogether
57.7 percent of credit taken by farmers
was provided through institutional arrangements.
Remaining 42.3 percent
credit market was controlled by informal
players. These players may be categorized
in one bracket of moneylenders
with a few individual exceptions. It is
evident from data in reference that credit
extended by cooperatives and commercial
banks emerged positively directed
towards increasing size of holdings
whereas credit extended by moneylenders
had inverse direction. Landless
households took 47.3 percent loan from
moneylenders alone. Adding extended
informal usury network it came to 77
percent. Near landless and marginal
households took 56.7 percent and 47.2
percent of loan amount respectively from
informal usury networks. State wise
variations suggest that non-institutional
share of loan finance was higher in many
states. Non-institutional finance controlled
greater credit market to the tune
of 68 percent in Andhra Pradesh followed
by Rajasthan, Assam Bihar and
Punjab. Although Maharashtra provided
83 .8 percent credit through institutional
sources farmers were not free from
distress and suicides. This suggests that
provision of institutional credit is although
important it alone cannot be sufficient
to rescue the farmers from the
syndrome of despair.
Flow of institutional credit amount to
agriculture over the years increased
many folds by cooperatives, commercial
and regional rural banks in terms of
short, medium and long terms loan. But
the question of distributional aspects of
credit remained to be addressed effectively.
Total credit extended by cooperatives
was to the tune of Rs.24.23 crore in
1950-51 to Rs.15,957 crore in 1998-99
56 THE IIPM THINK TANK