A STUDY ON CREDIT RELATED EXPERIENCES OF FARMER HOUSEHOLDS IN VIDARBHA REGION OF INDIA

Abstract

The present study was undertaken to analyze different credit related experiences of the farmer households in cash as well as subsistence cropping regions in the context of farmer distress and to suggest some innovative measures to improve access to credit for farmers. The study began with a critical evaluation of the functioning of agricultural credit system in India. This was done on the basis of secondary materials both published and collected from the areas, where this study was undertaken. The various aspects studied indicate that the outlook of the performance of agriculture credit system in India is discouraging. However, the share of formal sources in flow of credit to agriculture has increased over the years but it is not sufficient and not in the right direction. Small and marginal farmers are still dependent on informal sources especially the moneylenders for their credit needs. Present study was based on both primary as well as secondary data. The primary data for the present study was collected from 300 farmer households in the Vidarbha region of Maharashtra state following a multistage stratified random sampling process. To get the information regarding credit experiences, a well structured questionnaire was filled personally by these sample households from March 2009 to July 2009. Total collected data was compiled and analyzed by using suitable statistical techniques i.e. mean, standard deviation, tabular analysis, test of significance, ANOVA, ranking analysis, correlation and regression etc. and interpreted accordingly. In the present study a wide gap was found between demand and supply of the agricultural credit in the region under study. Although formal sources are the most important category in terms of providing access to credit to farmer households, they are not fully able to fulfill the credit need of the farmers in general and small and marginal farmers in particular, which led farmers to resort to other sources of credit. It was found that informal sources were helpful to the poor and were helping them at the time of need. Indebtedness was found positively correlated with the size of land holdings, which shows that large farmers were not prompt in repaying their loan. Logistic regression results show that annual family income, percentage of irrigated area to gross cropped area, distance from formal sources, age and small category of farmer were significant determinants for access to formal credit. While farming pattern, v diversion of crop loan, amount of formal loan and amount of informal loan were main drivers for indebtedness of farmer households. Results of Ordinary Least Square Regression show that farming pattern, land holding size, farm assets, returns from agriculture, percentage of irrigated area to gross cropped area, distance from formal sources, delay in delivery of formal loan, annual income of farming households and timely repayment of loan are the important factors governing the size of credit availed by the farming