Cost of agricultural credit to small and marginal farmers in Udham Singh Nagar district of Uttarakhand
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Date
2009-08
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G.B. Pant University of Agriculture and Technology, Pantnagar - 263145 (Uttarakhand)
Abstract
The study was conducted in Udham Singh Nagar district of Uttarakhand. It was based on survey of 80 small and marginal farmers (60 borrowers and 20 non borrowers). The study aimed at examining socio-economic characteristics of small and marginal farmers, lending procedure of commercial bank, PACS and RRB, source-wise and purpose-wise flow of agricultural credit, cost of agricultural credit incurred by farmers in borrowing production and investment credit from different agencies, the extent of non-participation of farmers in formal agricultural credit and reasons thereof. The primary and secondary data was collected for the agricultural year 2007-08. Simple descriptive analysis was performed to accomplish various objectives.
The average farm size was found to be 1.27 ha. Average family size was 9.21. 58.33 per cent farmer-borrowers were APL. Rice and wheat were the important cereal crops grown on 33.55% and 33.93 % of total cropped area respectively. The intensity of cropping was more than 200%. On average annual income of households was Rs.83160 at overall situation. Major part of which was contributed by cropping and business activities.
The lending procedure for production and investment loan of the commercial bank, PACS and RRB was found to be almost same. KCC was the main route through which production credit could be taken from institutional agencies. Commercial bank and cooperatives emerged as the dominant sources of production credit for small and marginal farmers.
At aggregate level per farm credit borrowed from different agencies was Rs.33141. Share of production and investment credit in the total credit was 79.57% and 20.43% respectively. Overall real cost of borrowing per Rs.100 of production loan was estimated to be Rs.11.35 and Rs.23.16 in case of production loan and investment loan respectively. It was lowest in commercial bank (Rs.9.51) and PACS (Rs.22.36) for production loan and investment loan respectively. Non-interest cost was lowest for PACS and commercial bank in case of production loan and investment loan respectively.
Extent of non-participation in credit programme in the study area was found to be 48.51 per cent. Lack of awareness, risk, informal sources, untimeliness, complex procedure and inflexibility of loan were the main reasons attributing to farmers being out of fold of institutional credit programme.
The results suggest that step should be taken to enhance the credit absorption capacity of the farmers. At the same time banks have to make their credit delivery system more accessible and popular to farmers at lesser cost. Regional Rural Banks are needed to be revamped. Programmes concerning the awareness about institutional credit along with insurance are needed to be stepped up.
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