INTRODUCTION
A large proportion of the population in India is rural based and depends
on agriculture for a living. Enhanced and stable growth of the agriculture sector is
important as it plays a vital role not only in generating purchasing power among
the rural population by creating on-farm and off-farm employment opportunities
but also through its contribution to price stability.
Credit plays an important role in increasing agriculture production.
Availability and access to adequate, timely and low cost credit from institutional
sources is of great importance especially to small and marginal farmers. Along
with other inputs, credit is essential for establishing sustainable and profitable
farming systems. Most of the farmers in India are small producers engaged in
agricultural activities in areas of widely varying potential. The major concern of
the Government is therefore, to bring all the farmer households within the banking
fold and promote complete financial inclusion
The Government of India has initiated several policy measures to improve
the accessibility of farmers to the institutional sources of credit. The emphasis of
these policies has been on progressive institutionalization for providing timely and
adequate credit support to all farmers with particular focus on small and marginal
farmers and weaker sections of society for enabling them to adopt modern
technology and improved agricultural practices. The policy lays emphasis on
augmenting credit flow at the ground level through credit planning, adoption of
region-specific strategies and rationalization of lending policies and procedures.
Agriculture sector is vital for India in view of the food and nutritional
security of the nation as well as the fact that the sector remains the principal
source of livelihood for more than 58 percent of the population though its
contribution to the national Gross Domestic Product (GDP) has declined over the
past years and has reached 14.2 percent in 2010-11 due to higher growth
experienced in industries and services sectors. Indian agriculture is dominated by
small and marginal farmers as Small and marginal holdings (below 2.00 ha.) taken
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Study Area:
The present study was conducted in Balh Valley of Mandi district. This
block was selected purposively because this is the most fertile valley of Himachal
Pradesh and is known for commercial agriculture production. The farmers of the
area adopts modern technologies of production and there is growing requirement
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of capital. The PNB is operational in the area for meeting the need of the farmers.
The Balh valley lies in Mandi district at an average elevation of 800 meters. The
main crops are wheat, maize, sugarcane, ginger and paddy. It is the most fertile
valley of Himachal Pradesh and is known for commercial agriculture production.
The farmers of the area adopt modern technologies of production. Punjab National
Bank has its presence in this area through a network of branches in different rural
locations.
Need of Study:
India has systematically pursued a supply leading approach to increase
agricultural credit. The objectives have been to replace moneylenders, relieve
farmers of indebtedness and to achieve higher levels of agricultural credit,
investment and agricultural output. In general, it is difficult to establish a causal
relationship between agriculture credit and production due to the existence of
critical endogenic problem.
However, increased supply and administered pricing of credit help in the
increase in agricultural productivity and the well-being of agriculturists as credit
is a sub-component of the total investments made in agriculture. Borrowings
could in fact be from multiple sources in the formal and informal space.
Borrowing from formal sources is a part of this sub-component. Finally, mere
increase in supply of credit is not going to address the problem of productivity,
unless it is accompanied by investments in other support services. In the present
study, we take a re-look at the problem by quantitatively assessing the impact of
institutional credit expansion on agriculture to assess the impact of the agricultural
loans on crop productivity and farmers income and also to suggest issues for
improved loan productivity.
The Balh block was selected purposively because this is the most fertile
valley of Himachal Pradesh and known for commercial agriculture production.
The farmers of the area are highly aware about the potential of commercial
agriculture and are adopting the latest capital intensive agriculture practices. The
adoption of new crops enterprises and modern technological innovations is highly
capital intensive which is meet through bank loans and other government
schemes.
The Punjab National Bank is rendering a large number of loans to the
agriculturists of the area which needs to be comprehensively examined for its
nature and extent. It is also important to study the impact of agriculture loans on
crop productivity and farmer income bringing them by certain policies
implications. The present study was therefore conducted on the agriculture loans
availed by the farmers of Balh Valley.
Objectives:
The present study was conducted with the following specific
objectives:
1. To study the nature and extent of agriculture loans availed by the by
selected farmers.
2. To assess the impact of the agriculture loan on crop productivity and
farmers income.
3. To suggest issues for improved loan productivity.