Structure of Credit and Indebtedness among Rural Farm Households in Punjab

Credit is an important input which has played significant role in development of Punjab agriculture. Introduction of green revolution made farmers proficient to go for intensive cultivation through multiple cropping patterns and their demand for purchasing inputs has increased, which made them dependent upon institutional and non-institutional sources of finance. In light of this, the present study made an effort to examine structure of credit and indebtedness among farmers in Tarn-Taran district of Punjab. The study is based on the primary survey and the data has been collected from 100 respondent farmers through questionnaire and simple statistical tools have been used to analyze the data. The results shows a positive relationship has been found between size of holdings and loans taken from institutional sources. Moreover, the study found that large number of farmers were under debt and majority of marginal and small farmers availed loan for unproductive purposes, whereas, medium and large farmers took loan for productive purposes. The main cause of indebtedness or high rate of outstanding loans was the high rate of interest being charged from farmers and their low level of income. As the size of holding increases, the proportion of outstanding loans of net income decreases. It was found that an outstanding loan per household, as well as repayment per household, was highest in the case of large farmers. However, debt per acre was highest in the case of marginal and small farmers.