Extent of Rural Indebtedness With Special Reference to Punjab

Abstract

Farmers Indebtedness in the State has emerged as a central issue. This is because, the problem of indebtedness, damaged the social status of a farmer and leads them to psychological unrest. Therefore, the issue of farmers ’indebtedness becomes a matter of intense debate for whole of the country and as well as for Punjab. In this background, the present paper is made to attempt the status of households indebtedness in the State in detail. In this context, the paper examines the nature and extent of households indebtedness in the state of Punjab using the unit record data from the 70th round of the National Sample Survey Organization (2014). The results of the study indicate that the informal mechanism of credit delivery is playing an important role for marginal and small farmers in meeting their credit requirements in the State. Near about sixty three per cent share of loans to total loan were used in productive activities in Punjab. Housing and other households expansive was the major unproductive expenses in Punjab. In addition, the maximum outstanding debt burden was found Rs. 114732.34, which is 90.12 per cent of the total amount borrowed in the region. 71.89 per cent Incidence of Indebtedness (IOI) is found in the state of Punjab and the status of Scheduled Tribes, Scheduled Cast and Backward Class households are not better, while on an average the status of households those belong to other social group of farming community is better in the State. The size of land holding is also negatively associated to informal borrowing. On the basis of foregoing analysis, it is to be suggested that the State government should monitor the informal mechanism of credit, increase the awareness among farm households in general and marginal and small in particular, about the disadvantages of utilization of loan in unproductive activities and strengthen the Co-operative movement in the State.