Nature and Dimensions of Farmers’ Indebtedness in India

Rajeev, Meenakshi and Vani, B P and Bhattacharjee, Manojit (2012): Nature and Dimensions of Farmers’ Indebtedness in India.

Abstract

This paper examines nature and extent of farmers’ indebtedness in India using unit record data from NSSO 59th round, and provided a comparative picture of major Indian states. It shows using data from rice cultivating farmers that productivity of small farmers is not only higher than the medium farmers, it increases with access to credit. In terms of access to credit, seen through extent of indebtedness, Karnataka is better placed than many Indian states. But Andhra Pradesh, Tamil Nadu, Punjab and Kerala lie ahead of Karnataka. Ironically however, almost half of the credit is still provided by the informal sector in the state of Karnataka (on an average). Region wise picture shows that Southern region is more dependent on informal sources of credit. Poor farmers with lower land holdings are much more deprived of the formal sources of credit than the comparatively richer ones. Thus they also pay a much higher rate of interest with modal value of 36%. But it is heartening to note that loans are taken mostly for income generating purposes. It also indirectly implies that even for the income generating purposes poor are not getting access to formal sources of credit.

• Item Type: MPRA Paper
• Language: English
• Keywords: Incidence of indebtedness, productivity analysis, formal sector credit, indebted households
• Subjects: A - General Economics and Teaching > A1 - General Economics > A10 - General; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C80 - General

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