Rural Credit Markets in Haryana

(A Case Study of Kharkhoda)

Dissertation Report

submitted in partial fulfillment for the award of the degree of

Master of Philosophy (Economics)

Under the guidance Of Dr. Shamsher Singh Deptt. Of Economics Govt. College, Rohtak
Submitted by

Ms. RENU DEVI

(Roll No. 091445, REG NO. 08-DE-61252)

CERTIFICATE

This is to certify that Ms. Renu Devi, a student of M. Phil., CDLU, Sirsa, (Roll No. 091445, Registration No. 08-DE-61252) has successfully completed her dissertation titled Rural Credit Markets in Haryana (A Case Study of Kharkhoda) under my guidance.

She has shown great commitment and dedication to his work and has successfully completed the thesis.

(Dr. Shamsher Singh)

Dissertation Guide Deptt. Of Economics Govt. College, Rohtak

ACKNOWLEDGEMENT

THROUGH THIS THESIS WORK, I HAVE TRIED TO UNDERSTAND RURAL

CREDIT M ARKETS IN KH ARKH ODA, H ARYAN A . SEVERAL PEOPLE HAVE

PLAYED A KEY ROLE TOWARDS THE SUCCESSFUL COMPLETION OF THIS DISSERTATION. I WOULD LIKE TO TAKE THIS OPPORTUNITY TO THANK THEM. I WOULD LIKE TO EXPRESS MY DEEP REGARDS AND SINCERE GRATITUDE TOWARDS DR. SHAMSHER SINGH, GOVT. COLLEGE ROHTAK, WHO HAS BEEN MY ME PROJECT AND TO GUIDE OUT THROUGHOUT ALWAYS THE BEST THE PROJECT. THAT HIS AND WAS KNOWLEDGE MOTIVATED EXPERIENCE BRING ENCOURAGED EFFORT

REQUIRED TO COMPLETE THE PROJECT. HIS GUIDANCE ENABLED ME TO COMPLETE THIS PROJECT. FINALLY I WOULD LIKE TO THANK ALL THOSE, TOO MANY TO SINGLE OUT BY NAME, WHO HELPED ME IN NO SMALL MEASURE THROUGH THEIR SUGGESTIONS AND COMMENTS. THEIR SUPPORT HAS BEEN INSTRUMENTAL IN MAKING THIS RESEARCH A REALITY.

RENU DEVI

CONTENTS
CHAPTER NO.
1

TITLE
INTRODUCTION

PAGE
5

GROWTH OF RURAL CREDIT IN INDIA

SOCIO-ECONOMIC BACKGROUND OF 21 THE SAMPLE HOUSEHOLDS AND THE STUDY AREA

FORMAL CREDIT SYSTEM IN THE VILLAGE

49

STRUCTURE AND PERFORMANCE OF INFORMAL SECTOR CREDIT

56

SUMMARY AND CONCLUSION

65

BIBLIOGRAPHY

CHAPTER I

INTRODUCTION

INTRODUCTION
Credit is important for agriculture sector because of the capital intensity and advanced technology involved, which is growing at a fast rate. In order to place the economy on sound footing, credit is required to assist the rural masses which are directly or indirectly related with agriculture. In recent years the formal credit has come to the forefront for providing timely and sufficient credit to cultivators and other sections of rural households. The growth of formal credit has generated competition among the lenders in the rural areas. As a result, the share of informal sectors which was a major source of credit in the rural areas has been reduced. The competition among the lenders has also reduced the rates of interest charged by the moneylenders in the rural areas. Even though the growth of formal credit has reduced the exploitive character of the informal lenders, it has faced a variety of problems. First the formal credit institutions are faced with the problem of Overdue. It is surprising to note that around 50% of loans granted have not been repaid and are lying as overdue and are outstanding with a large proportion of Rural Financial Institutions. Studies reveal that large farmers become more delinquent more often as compared to the small ones. And non-repayment has a tendency to spread. Mostly, a vicious circle sets in, farmers do not repay since the chances to get a new loan are bleak and institutions cannot provide adequate loans because they are not getting their money back. Further, many farmers take these loans as grants from Government, and then let the repayment completely from their memory lane. The second problem of rural financial situation is that deposits are not coming as much as the amount needed for the general financial viability of the institutions. There are two sources of finance for an institution, internal and external. External sources mainly consist of borrowing and assistance from State Government, Central Government and apex institution. The other is to mobilize its own savings from the rural houses. The rural saving mobilization of the financial institutions is very low. Given these problems, it will be difficult for

7 these institutions to serve the poor in terms of the provisional credit at proper time. It is desirable to know as to how the different sectors of the credit market have been functioning in the rural areas of Haryana. It is also desirable to know that how the growth of formal credit institutions has affected the informal sector of the credit market in terms of the terms and conditions of borrowing. Further in what ways has formal sector grown in rural areas. These aspects will be analyzed in this study. In short the main objectives of the study are to analyze the growth of formal and informal credit sectors, and, to see to what extent the growth of the former has affected the latter.

DATA COLLECTION AND STUDY AREA

The study is based on primary and secondary data collected by me. Data has been collected from various publications of Central and State Government and Reserve Bank of India. The primary data has been collected with the help of interview method and with a questionnaire. Statistical Abstraction of Haryana, Statistical Statements relating Primary Agricultural Societies are chief sources of secondary data.

DESIGN OF THE STUDY

The design of the study is as follows: 1. The first chapter deals with the introduction in which objectives of study, method of data collection and limitations of the study have been discussed. 2. Second chapter discusses progress of rural credit in India. 3. The third chapter discusses the socio-economic background of the sample and study area with a view to provide background for subsequent chapters. 4. Fourth chapter analyses the credit markets in the sample village. 5. Last chapter contains a summary and conclusion of the study.

LIMITATIONS OF THE STUDY

The limitations of the study are as follows:

1. One of the important limitations of the study is that the data collected from the informal sector, which arose peoples fear to divulge their economic position. 2. The study is mainly based on primary survey data of households collected by me within limited time period and resources 3. With the limited time periods at the disposal of the researcher, the sample size of the present study is small, 100 respondents only. Therefore, the study may not be true representative of the institutional and the non-institutional credit system in Haryana. Despite the above limitations, it is hoped that the present study will throw some light on interaction between institutional and non-institutional credit system in Haryana.

CHAPTER II

GROWTH OF RURAL CREDIT IN INDIA

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CREDIT INSTITUTIONS IN INDIA AND HARYANA

Credit is the pivot around which the subsistence economy of small farmers of India sustains and grows. It serves as the lever to stimulate, develop weaker sections. It is important for a variety of reasons. It encourages production through adoption of new technology and helps the deficit households to meet their various needs. Many deficit farmers do not apply modern inputs in farming due to lack of working capital. Access to credit helps such households to increase production by raising the productivity of their land. Further many forms of households cannot improve their land or purchase machinery which need huge amount of capital. Thus, credit plays an important role in increasing production and satisfying consumption and other needs. In most developing countries informal private lending is an important source of funds for farmers as compared to credit from public institutions. This chapter discusses the organization of formal and informal sector in India and Haryana. First Section will analyze the structure of credit and its classification. Second Section will examine the progress of credit of both institutional and non-institutional sectors in India. Lastly a summary is provided at the end.

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SECTION - I

In this section we discuss the structure and classification of rural credit market in Haryana. It can be divided in to two broad sections namely, Organized and Unorganized. The unorganized market is the one that operates outside the provision of Indian Banking Companies Act and maintains private accounts which are not audited. The organized market, on the other hand, works within the provision of the Banking Companies Act and maintains accounts which are open to audit and regular inspection. The cooperatives and commercial banks are included in the organized sector. Thus, while the organized sector is amenable to control, the unorganized is not. The network of financial institution in rural area can be seen in chart I and II.

CHART 1

N E T W O R K O F R U R A L F I NA N C I A L I N S T I T U T I O N S I N H A R Y A N A A N D I N I N D I A N MONEY MARKETS.

UNORGANISED Money Lenders Indigenous Bankers Chit Funds Nidhis Shopkeepers, Traders Friends and Relatives

ORGANISED Loan Offices Cooperative Societies Joint Stock Companies Scheduled Commercial Banks Semi Scheduled Banks a) Central Cooperative Bank b)Primary Land Development Bank

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CHART II

UNORGANISED SECTOR

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NATURE OF LENDING: FORMAL AND INFORMAL

Short-term and medium term loans are provided to the farmers by central cooperative banks through Primary Agricultural Societies (Mini Banks). During the year 1986-87, loans to tune of Rs 241.29 crores were advanced by Central Cooperative Banks. Out of this amount, Rs 4.27 crores was advanced to the artisans, Rs 9.35 crores to petty shopkeepers and to other professionals in villages, besides 4.77 crores for consumption purposes. A sum of 14.08 crores to the farmers was advanced as medium term loans in the state. The Haryana State Cooperative Land Development Authority, through its 71 Primary Cooperative Land Development Banks, advanced a loan of Rs 38.64 crores to 28523 members during the year 1986-87. Out of this amount, a sum of 14.37 crores was advanced to 10807 farmers for minor irrigation purposes, Rs 5.26 crores advanced to 778 farmers for purchase of tractors and Rs 18.99 crores to 16668 farmers for other purposes. Specific provision has been made in Haryana Cooperative Society Act 1984 for providing long term loans for the landless, amounting up to Rs 5000/- without tangible security. This bank is advancing loans for the purchase of land, tractors and other agricultural machinery for setting up poultry or piggery units, for horticulture etc. 438 branches of commercial banks in the rural area of the state advanced Rs 66.0 crores to the farmers and 204 branches of the Regional Rural banks in the state advanced Rs 5.78 crores to 10225 farmers. Regarding the informal loan, the traditional moneylenders (Mahajan, Sharaffs, and Landlords) still have the main say in advancing loans to the small and marginal farmers. The rate of interest in the informal sector is exploitative and it varies from 18% to 34% in the state.

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SECTION II

This section discusses the progress of credit, both institutional and noninstitutional, in the country. The moneylender is not fettered by any legal restrictions in his credit operations. He charges high rate of interest on loans and possesses a monopolistic position in rural financing. When the moneylenders could not be brought under legislation, it was then widely felt that institutional arrangements be made to meet credit requirements of borrowers of the rural areas; fully, cheaply, and efficiently. The efforts in this direction have brought notable changes in the field of rural credit. The significance of moneylenders and other non-institutional agencies has been declining and the role of institutional sector has increased. Owing to so many evil in the private agencies, many have opined that an organized setup of institutional financing should be developed in our country to provide agricultural finance. It was said that only the well organized credit institutions could save the situation of exploitation of the farmers by the private agencies of rural credit. Hence, efforts will be made in India to provide institutional agencies for rural credit.

CLASSIFICATION OF AGRICLTURAL CREDIT

The formal credit structure in India has two bases namely, the basis of time period and that of purpose. On the basis of time period, the organizational credit is organized in to i. ii. iii. Short term credit Medium term credit ; and Long term credit.

There is no hard and fast rule regarding the duration of loans to distinguish the above types of loans. However, by convention and on the basis of experience regarding agricultural operations the following classification has come to be accepted. The Rural Credit survey in its report of 1954 has reported the following main features of period wise loans:

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1. Short term or Seasonal Credit.

It is one which provides farmers with the working capital to run their farms efficiently, to obtain their crop in the best possible circumstances and to hold the credit until the harvest is sold. The period of credit of this type does not exceed 15 months.
2. Medium term Credits.

It is one which provides the farmers with capital to purchase livestock and farm machinery and also to carry out the improvements of an average duration. This type of credit is for period longer than 15 months, but not more than 5 years.
3. Long term Credits.

It is the one which offers farmers the means for purchasing land or to effect improvement or to purchase costly machinery. The period for such debt varies from country to country, and, place to place. In India, the normal period for long term loans is from 5 to 20 years.

On the basis of Purpose, agricultural credit needs of the farmers can be classified in the following categories i. ii. Productive, Unproductive.

Under productive needs we can include all credit needs which directly affect agricultural productivity. Farmers need loans for the purchase of seeds, chemical fertilizers, manures, agricultural implements, livestock, digging and repairs of wells and tube wells, payment of wages, effecting permanent improvement on land, marketing of agricultural produce etc. Repayment of these loans is generally not difficult because the very process of production creates the where with all for payment. Under the Unproductive category falls the loans incurred for other miscellaneous purposes, farmers often require loans for consumption needs as well. Between the time of marketing of agricultural produce and harvesting of the next crop, there is a long interval of time and most of the farmers do not have sufficient income to sustain them through this period. Therefore, they have to take loans meeting their consumption needs. In the time of droughts and floods, the crop is considerably damaged and farmers (, who otherwise avoid taking loans for consumption needs) also have to incur such loans.

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16 Institutional credit agencies do not provide loans for consumption purposes. As a result, farmers are forced to fall back upon moneylenders and Mahajans to meet the requirements. In addition to consumption needs, farmers also require loans for a multiplicity of other unproductive purposes such as litigations, social ceremonies, like marriage, the birth or death of a family of a family member, religious ceremonies, festivals etc. Since, institutional agencies do not grant credit for such unproductive purposes. As a result, farmers are forced to fall back upon moneylenders and Mahajans to meet such requirements. In addition to consumption needs, farmers also require loans for a multiplicity of others unproductive purposes, such as litigation, social ceremonies like marriage, the birth or death of a family member, religious functions, festivals etc. Since institution farmers have to seek assistance from money lenders and Mahajans, it is often very difficult to repay such loans because they do not contribute to the productivity of the farmer.

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AGRICULTURAL CREDIT AGENCIES IN THE COUNTRY

The credit needs of agriculture in India are met by both institutional and noninstitutional agencies. The non-institutional agencies which have been playing a dominant role, though not in a desirable manner, include agriculturists, money-lenders, commission agents, landlords, friends, relatives and others. The institutional agencies providing agricultural credits are cooperatives, commercial banks, regional rural banks, Government, and some institutions like Insurance companies. At the top of these institutional agencies, there is the R.B.I., which is directly or indirectly subsidizing and guiding these agencies to make them more effective.

NON-INSTITUTIONAL AGENCIES In India, the bulk of short term as well as long term credit were provided by professional money lenders, earlier commonly known as Mahajans. The money lenders generally combined his business with trading in agricultural produce. He is by far the most important source from the point of view of extending loan to majority farmers in the village. But the credit from money lenders is on unfavorable terms and, therefore, farmers are not able to make the full use of the loan for the agricultural production. In fact it puts the farmers in heavy debt, adversely affecting production since moneylenders exploit the farmers in various ways.

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TABLE 2.1

P E R C E N T A G E S H A R E O F I N S T I T U T I O NA L A N D N O N - I N S T I T U T I O N A L A G E N C I E S I N RURAL CREDIT

Agency 1 2 3 4 5 6 7 8 9 Agricultural Moneylenders Professional Moneylenders Traders and Commission Agents Other( including relatives, friends and landlords) Non-Institutional Agencies Cooperatives Commercial Banks Government Institutional Agencies (5+9) TOTAL

1951-52 24.9 44.8 5.5 17.5 92.7 3.1 0.9 3.3 7.3 100.0

198182 8.3 7.8 3.2 17.5 36.9 29.9 29.4 3.9 63.1 100.0

Source: Rural Development in India some facts, published by National Institute of Rural Development: Hyderabad, 1978, p.255. Survekshra July 1987, p.1415, and AIDIS 1971, p.33-34.

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This is also evident from the table 2.1 that the institutional agencies have increased their landing capacity from a mere 7.3% in 1951-52 to 63.2%. What is more impressive is that the cooperatives have increased their share from a mere 3.1% in 1951-52 to 63.2% in 1981-82. The Commercial Banks have also improved their share while the share of the State Governments remains more or less same during the same period. At the same time the role played by noninstitutional agencies declined substantially, from 93% to 40%. Thus on observing the relative position of different credit shown in table 2.1, it is found that at all India level Cooperative Societies and Commercial Banks are two most important agencies, it is evident from the table that most remarkable performance was that of Commercial Banks. These have opened a large number of branches in the rural areas and introduced rural bank schemes. In view of this the share of all non-institutional agencies recorded a sharp decline.

DEMAND FOR AGRICULTURAL CREDIT IN THE COUNTRY

With the onset of Green Revolution and introduction of modern technology during mid sixties farming has become more capital-intensive. The economic condition of Indian farmers is such that majority of them are not able to meet their requirements from their own resources. Many cannot even think of investing in other productive enterprises for improving their economic conditions. Therefore they have to depend on various agencies for borrowing either for self consumption or for investment in agriculture. In fact, agriculture has become a sin-qua. -non for agricultural development. The demand for agricultural credit in India has been estimated from time to time. The national commission under the chairmanship of B. Shivraman, in its interim report, estimated that to achieve the food grains target of 165 million tones, the cultivation of all categories required total credit( short medium and long term nature) of Rs. 9433 crores by the end of year 1985. This is shown in the table 2.2 as given.
TABLE 2.2

REQUIREMENT OF CREDIT FOR 1985 (RS. IN CRORES)

SHORT TERM 1. Marginal and Small Farmers 1766

MEDIUM & LONG TERM 2022

TOTAL 3788

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20 2. 3. TOTAL Source: 1986. Medium and large Farmers Agricultural Machinery 2242 _ 4008 3003 400 5425 5245 400 9433

B. Shivraman, Indian Journal of Agricultural Economy, Vol.2,

Out of the total credit needs of Rs. 9433 crores, the cooperatives were only able to achieve the target of Rs. 4250 crores; which amounts to only 45.2% of the total requirement, in 1985.

AGRICULTURAL CREDIT DEMAND IN HARYANA

Haryana has made significant progress in production of agricultural commodities, during the 7th plan. The annual average growth over the last three years of the 6th plan has been 5% under food grains, 7% under sugarcane, 5.6% under cotton and 18% under oil seeds. This has been made possible by increasing intensity of cultivation, use of improved seeds, fertilizers, and pesticides. Area under irrigation has also been increased by 7% under the seventh plan. (Source: Govt. of Haryana, draft Eighth Plan 1990-95 and Annual Plan 1991-1992). Consequently the credit requirement for the agrarian sector in the state has been increasing continuously. Of the late, the cooperative institutions and the commercial banks are playing a very crucial role in the development of the state by providing short term and long term loans to the farmers for the purchase of seeds, chemicals, fertilizers etc. and medium and long term loans for the reclamation of land and purchase of agricultural machinery like tractors etc. The structure of, credit needs of agricultural sector of the state is also discussed. Small farmers have great need for short term loan and medium and large farmers need medium and long term loans. The co-operative societies fulfill the short term needs of different size of farm households, whereas the long term goals are met by primary land development banks and the commercial banks. Regional rural banks meet the needs for credit of the landless laborers and of marginal farmers. A table in this context is given below:

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TABLE : 2.3

D E M A N D F O R A G R I C U L T U R A L C R E D I T I N H A R Y A N A (C R O R E R S . )

Requirements from institution and duration 1 (a) Co-operatives Short Term 1 (PACS) Medium term 2 (PACS) Long Term 3 (PLDB) Total (b) R.R.B.s (c ) Commercial Banks (Long term) Total

1984-85 2 171.71 3.99 46.50 222.35 7.76 80.62 88.38

1985-86 3 200.09 11.03 55.37 266.49 7.88 92.65 100.53

1986-87 4 220.46 13.38 60.27 249.11 8.08 109.25 117.33

1989-90 5 281.35 6.93 45.72 334.00 13.17 114.44 127.61

1990 6 250.80 10.60 46.65 307.90 15.21 118.07 133.28

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SECTION - III
CONCLUSION Thus, credit is important for the development of agriculture as it helps the adoption of new technology resulting in increased production. Further, many deficit households need credit to meet their multifarious needs. The agricultural credit requirements are met both, by the institutional and noninstitutional agencies. The non institutional agencies include professional money lenders, agriculturist money lenders, commission agents, traders, landlords, friends, relatives, and others. The institutional agencies provide agricultural credit for meeting production requirements including working capital for the improvement of land. Of late, the provide loans for consumption purposes on a limited scale to the deficit farm households. On the other hand, the informal money lenders provide credit for a variety of purposes including consumption, social and production purposes. The progress made in the advancement of credit by the formal credit agencies has been rising since the early 1970s as compared to the 1960s. For instance, the institutional agencies have increased their lending capacity from a mere 7.3% in 1951-52 to 42% in 1981-82. Even though there has not been significant progress of formal credit in the country however it has affected at the micro level is not known properly. This study will provide this aspect in details in the subsequent chapters.

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CHAPTER III

SOCIO ECONOMIC BACKGROUND OF THE SAMPLE FARMERS AND THE STUDY AREA

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SOCIO ECONOMIC BACKGROUND FARMERS AND THE STUDY AREA

OF

THE

SAMPLE

INTRODUCTION
This chapter discusses the socio-economic background of the study area and the sample farmers with a view to provide background information to the subsequent chapters. In the 1st section a brief description of the features of state of Haryana and Sonepat district is done, the 2nd section will discuss the socio-economic status of the sample farmer.

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SECTION-I GENERAL FEATURES OF HARYANA STATE:

HARYANA LOCATION: Haryana became separate state in the Indian union on 1st November 1996, as a result of the recognition of the erstwhile state of Punjab. The state is bounded in the north by Himachal Pradesh, in west by Rajasthan, in the north east by Punjab, in south by Delhi, and in the east by Uttar Pradesh. Known as the

cradle of ancient Indian Civilization, Haryana today is one of the youngest and most progressive states in the country. Its geographical area (44212 k.m.2) constitutes about 1.34% of the total geographical area of the country. As of 2001, the population of the state is 21144564.

HISTORY AND GEOGRAPHY: Haryana has a proud history going back to the Vedic age. The state was the home of the legendary Bharata dynasty, which has given the name Bharat to India. Haryana finds mention in the great epic of Mahabharata. Kurukshetra, the place of the epic battle between the Kauravas and the Pandavas, is situated in Haryana. The State continued to play a leading part in the history of India till the advent of the Muslims and the rise of Delhi as the imperial capital of India. Thereafter, Haryana functioned as an adjunct to Delhi and practically remained anonymous till the First War of India's Independence in 1857. When

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26 the rebellion was crushed and the British administration was re-established, the Nawabs of Jhajjar and Bahadurgarh, Raja of Ballabgarh and Rao Tula Ram of Rewari of the Haryana region were deprived of their territories. Their territories were either merged with the British territories or handed over to the rulers of Patiala, Nabha and Jind. Haryana thus became a part of the Punjab province. With the reorganisation of Punjab on 1 November 1966, Haryana was made into a full-fledged State. The State is bound by Uttar Pradesh in the east, Punjab in the west, Himachal Pradesh in the north and Rajasthan in the south. The National Capital Territory of Delhi juts into Haryana.

CLIMATE: Haryana has a semi arid climate in the south west and a genetic type one in the rest of the state. The climate of the state is generally very hot in the summer and marked by cold in the winter. The maximum temperature goes up to 47 degree Celsius, in May-June and during winter, the temperature drops below the freezing point with severe frost in the months of December and January. The average rainfall in the state is 580mm during the year. It varies from 53.45% of the annual rainfall in Sirsa district to 196.55% in Ambala district. The monsoon period from the middle of June till September accounts for over 80% of the annual rainfall. The winter rains are insignificant in quantity, yet they materially affect the prospects in the dry farming areas.

MAN POWER OF THE STATE According to the consensus of 2001, the population of the state is 21,144,564 with an average density of about 400 persons per square kilometer. An increase in the density of population is a natural phenomenon in any developing state with the passage of time. The density in Haryana has thus increased from 292 per square kilometer in 1981 to 369 persons per square kilometer in the year 1991. Faridabad district retained its first position of 1981 as being the densest district in the state. It had, back then, a density of 697 persons per kilometer while Sirsa district has the least density of 211 persons per square kilometer. About 75.21% of the states population lives in rural areas. The percentage of rural population varies from 31.54% in Faridabad district to 67.9% n comparison to 87.03% in Mohindergarh district. The literacy rate for the state as a whole works out to be 67.9% in comparison to 52.11 percent of the whole country. In the country the proportion of cultivators and agricultural laborers to total main workers in 1991 is 38.75 percent, 26.15

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27 percent respectively, whereas in Haryana these percentages are 39.38, 19.53 respectively.

LAND USE PATTERN According to village papers, the total area of the state is 44 lakh hectares. The area under forest is reported to be 1.32 lakh hectares. The area of the state put to non-agricultural uses, barren and cultivable waste and current fallows in 1981 was 3.69, 0.65, 0.30 and 1.77 lakh hectares respectively. Further, there exists high degree of inequality distribution among the land among the cultivators. AGRICULTURE AND IRRIGATION Agriculture is the most predominant and largest industry of the state. This sector provides livelihood to about 70 % of the population. The important crops grown in the sector are wheat, bajra, paddy, gram, sugarcane, jawed, cotton and maize and these crops are occupy about 35,16,7,21,4,3,2, 5 and 2% of the total cropped area respectively. The Haryana Govt. has given the top priority to the development of agriculture in the state. Today, Haryana is not only self sufficient in food grains but also among top contributors of food grains to the central pool. The state has witnessed a phenomenal increase in the increase in agricultural production. food grains output has had a quantum jump from 25.92 lac tones in 1966 to 90.09 lac tones during 1983-1990. The production of rice and wheat has risen by seven and six times respectively today. Similarly, production of cotton and oil seeds has also gone manifold.

AGRICULTURE Agriculture is the mainstay of more than 65 per cent population in Haryana with contribution of 26.4 per cent in GDP of the State. The quantum of food grain production, which was nearly 25.92 lakh tonnes at the time of inception of the State, was likely to touch 155.08 lakh tonnes in 2008-09 due to crop intensification and increase in production of principal crops. Rice, wheat, jowar, bajra, maize, barley and pulses, sugarcane, cotton, oilseeds and potato are the major crops of the State. Under the diversification of crops, more and more area is being brought under cash crops like sugarcane, cotton and oilseeds, vegetable and fruits. Sustainable agriculture is being promoted through the propagation of resource conserving technologies and organic farming. Dhaincha and Moong have also been encouraged to maintain soil fertility.

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28 INPUT USE PATTERN The breakthrough achieved in agricultural production in the state is largely due to vastly improved and sophisticated irrigation system and its optimum utilization. The system has grown to provide irrigation from 12.93 lakh hectares in 1966-67 to 199.46% of the total area in 1987-88. Haryana has 39.1 lakh hectares of arable land. To cover all the cultivable land by irrigation; it needs 33.65 MAF water from all sources. The expansion of irrigation in Haryana is indeed a remarkable achievement. The Jui, Siwani, Loharu and Jawahar Lal Nehru lift irrigation water against gravity flow to arid areas. The western Yamuna canal and the Bhakhra canal systems have been geared-up to divert water from one system to another to optimize the use of limited canal water. Flood water is being harnessed to serve the irrigation needs through a comprehensive flood control program .

IRRIGATION Haryana is a beneficiary of the multi-purpose project in Sutlej and Beas sharing benefits with Punjab and Rajasthan. Major irrigation projects are western Yamuna Canal System, Bhakra Canal System and Gurgaon Canal System. Haryana has raised water from lower levels to higher and drier slopes through JLN canal project. It is a new endeavour that gave practical shape to lift irrigation for the first time in India. The Jui, Siwani, Loharu and Jawahar Lal Nehru lift irrigation schemes have helped to carry irrigation water against gravity flow to arid areas. Sprinkler and drip irrigation have been introduced in the highly undulating and sandy tracks of Haryana. Construction work of Hathni Kund barrage at a cost of Rs.192 crore has been completed. Haryana and Uttar Pradesh would get additional water for irrigation purposes from the barrage and Delhi is also getting additional water for drinking. To ensure equitable distribution of water for irrigation and drinking purpose through out the State, the Government has been constructing a canal namely Bhakra Main Line-Hansi Branch-Buttana Branch Multipurpose link Channel of 109 kilometer length to the tune of Rs.354 crore. To utilise surplus water of river Yamuna during monsoon season the construction work of Dadupur-Shahbad Nalvi Canal project has been taken up at an estimated cost of Rs.267 crore. 590 cusecs surplus flood water will be used for irrigation and ground water recharging facilities to an area of 92,532 hectares falling in districts Yamuna Nagar, Ambala and Kurukshetra.

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29 The Government has sanctioned four projects of low height dams namely Kaushalaya dam, Dangrana dam, Dewanwala dam and Chhamla dam at an estimated cost of Rs.180 crore, Rs.63.69 crore, Rs.132.70 crore and Rs.20.41 crore respectively on river Ghaggar and its tributaries to prevent wasteful flow of water and loss to property by flood during the Monsoon season. The work on Kaushalya dam has been started with effect from March 18, 2008 and is likely to be completed by March 2010.

ROADS AND TRANSPORT Roads are a vital means of communication and they open up the hinterland and remote rural areas. The state has made commendable progress in road building. The road length per 100 square kilometer area was 11.42 in 1966-67 and it has increased to 47.2 in 1987-88. Lastly, the state government is committed to provide water supply to all the problem villages. There are 6745 villages in the state, out of which 5686 villages have been identified as problem villages. So far sweet water supply has been extended to all the 6745 villages. Roads: In Haryana all villages stand connected with metalled roads. The length of roads in the state is more than 34.772 kms.\ Railways: Kalka, Ambala, Kurukshetra, Rohtak, Jind, Hissar, Panipat and Jakhal are important railway stations. There is a railway workshop at Jagadhari. Aviation: There are civil aerodromes at Pinjore, Karnal, Hisar, Bhiwani and Narnaul.

POWER Haryana became the first state in country to ahieve 100 percent rural electrification in 1970. Starting with 20,000 tubewells in 1966 there were 4.51 lakh tubewells in March 2008. The average power availability during 2008-2009 was 743.45 lakh units a day. The number of consumers in 2007-2008 was 47.70 lakh. The installed generation capacity as on March 31, 09 was 4636.23 MW.

STATISTICS INFORMATION

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DISTRICT SONIPAT AT A GLANCE

The District Sonipat came in to existence on December 22, 1972 .It was a part of Rohtak district till December 21,1972. It is often believed that Sonipat was one of the five Prasths or towns demanded by Yudhishtara from Dhuryodhana as the price of peace.Another tradition as cripes its foundation to Raja Soni,thirteen in decent from Arjuna,a brother of Yudhishtara . Both these traditions are without substance. There is no mention of Sonipat in Mahabharat aithough it has been noted much earlier by the great grammarian Panini in his celebrated Ashtadhyayi. According to 2001 Census population of the district is 12.788 lacs. The district sex ratio per thousand male to female 839 and density of population per square kilometer of the district is 603. The district population constitutes 6.07% of the state population. Sonipat is the largest Tehsil in the district followed by Gohana Tehsil. Broadly speaking. The entire district is a part of the Punjab Plains. Soil of the district is fine foan, sandy & Callar with gradical slop to the south and west. District may be divided roughly in three Regions namely the Khader,Plain and sandy region. Climate of the district is dry within extremely hot summer and cold winter. The weather becomes comparatively mild during monsoon period July to September. The district experiences high humidity during the monsoon period. The annual rainfall varies considerably from year to year.
Administrative Structure Agriculture Health as (31.3.02) Banks Population as Per 2001 Census Irrigation 2001-02 Ayurvedic(as on 31.3.2002) Welfare 2002-03 Length of Roads maintained by PWD(B&R) (as on 31st 2001-02.) Technical Education 200102 Fishrise 2001-02 Forest Animal Husbandry Co-opration (as on 30th 2001-02-12 June,2001) Staff position (as on 31st Emplyoment (2001) March ,2001 in Distt. Sonipat) Education Post Offices(as on 31st March 2002)

30

31 ADMINISTRATIVE STRUCTURE

Date of creation of 22.12.1972 the District. Division in which it Rohtak falls. No. of SubThree- Sonipat,Ganaur,Gohana Divisions.. FourNo. of Tehsils. Sonipat,Ganaur,Gohana,Kharkhod No. of Sub-Tehsils. Khanpur Kalan Seven- Sonipat,Ganaur,Kharkhoda, No.of C.D.Blocks. Rai,Gohana,Kathura,Mundlana. No. of Municipal FourCommittees. Sonipat,Ganaur,Gohana,Kharkhoda No. of Market Three- Sonipat,Ganaur,Gohana Committees. FourNo. of Anaj Mandis. Sonipat,Ganaur,Gohana,Kharkhoda FourNo. of Town/City. Sonipat,Ganaur,Gohana,Kharkhoda No. of Villages Inhabited/ Un-Inhabited ------>328 + 15 Village Name No. of Village Sonipat 76 Ganaur 75 Rai 64 Kharkhoda 45 Gohana 35 Mudlana 31 Kathura 17 Total Village: 343 No. of Gram Panchayats Sonipat 68 Ganaur 65 Rai 54 Kharkhoda 43 Gohana 35 Mudlana 33 Kathura 18
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Total Village: General S.C. B.C.

316 No. of Panches

1447 Men 865 Women 395 Men 203 Women 309 Men ---No. of Surpanches General 166 Men 85 Women S.C. 41 Men 21 Women B.C. ------No of Panchayat Samities and their Members S.C. 21 Men 11 Women B.C. 7 Men ---Zila Parishad Head Quarter and its Members Sonipat ---13 Men ------8 Women ---S.C. 3 Men ---B.C. 1 Men 1 Women

POPULATION AS PER 2001 CENSUS

Total Population of the 1278830 District 695314 Male 583516 Female Rural Population and its Percentage to Total Population 957398 - 521296 Male ( 74.87)- 436102 Female Urban Population and its Percentage to Total Population 321432 - 174018 Male (25.13) - 147414 Female

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No. of villages in the Blocks.(1991) Blocks Villages Population Sonipat 76 174512 Rai 64 137818 Kharkhoda 45 120605 Gohana 35 100413 Mundlana 31 95083 Kathura 17 62300 Ganaur 75 143906 No. of villages in the Tehsil & Their Villages. (2001) Tehsil Villages Population Sonipat 153 603243 Gohana 83 339666 Ganaur 62 175838 Kharkhoda 45 160083 Urban Population and its% age to Total Population 2001 Town/City Population %age Sonipat 225151 --Kharkhoda 18758 --Ganaur 29005 --Gohana 48518 --Total 321432 25.13 S.C. Population & its %age to Total Population (1991) Total 189471 18.13 Rural 157994 18.93 Urban 31477 14.95 No. of workers & %age to Total Population.(2001) Agriculture 190690 -Agri. Labour 87594 -House Hold Inds 11342 40.94 Other Services. 233950 --

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Total

523576

EDUCATION

No. of literate persons & percentage to total population 2001. ( Excl. 0-6 years of age group) Male/Female Persons Percentage Total 800025 73.71 Male 492650 83.95 Female 307375 61.65 Rural Literate Persons & %age to Total Population. Male/Female Persons Percentage Total 574125 71.08 Male 360579 82.40 Female 13546 57.69 Total Population Under 0-6 Years of Age Group Total 193436 Male 108477 Female 84959 Rural Population Under 0-6yrs of Age Group Total 149654 Male 83698 Female 65956 Urban Population Under 0-6yrs of Age Group Total 43782 Male 24779 Female 19003

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Urban literates persons and %age to total urban population.(Excluding 0-6 yrs of age group) Total 225900 76.69 Male 132071 82.73 Female 9382 69.33 Govt./Non Govt.Institution. 2001-02 School Boys Girls Total Primary Schools 556 107 672 Middle Schools 112 16 128 High/Sr.Sec. 275 43 318 Schools Collage by Type of Management Collage Govt. Private Total i. Art & Science For General 1 2 3 For Women 6 6 ii. Medicines For General For Women 1 1 iii. Education For General 2 2 For Women iv. Engineering For General 1 2 3 For Women v. Sports For General 1 1 For Women No.of Students by Class as on 31.3.2002 Boys Girl Total 14540 13325 27865 14640 12450 27090 14940 12153 27093 14156 10156 24312

Class Ist 2nd 3rd 4th

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5th 11634 9633 21267 th Total Students up to 5 : 127633 6th to 8th 8604 8420 17024 th Total Students up to 6 to 8th : 17024 9th 19063 12983 32046 th 10 27853 14193 42046 th 11 20096 15450 35546 th 12 10972 6972 17944 th Total Students up to 9 to12th : 127582 Grand Total of Studeznts. :272239 No. of Teachers by Sex in Distt Sonipat During 200102 Male Female Level Total Teachers Teachers Primary 1536 1918 3454 Middle 407 273 680 High 1410 1023 2433 Sr,Sec.Schools 1568 1087 2655 Total No. of Primary/PrePercentage S.C,Students Primary Total 28965 Boy 14727 22.69 Girls 14238 Total No. of S.C.Students Middles Total 3376 Boy 1881 19.83 Girls 1495

Total No. of S.C.Students in High/Hr.Sec. Total 13364 Boy 7262 10.47 Girls 6102

TECHNICAL EDUCATION

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No.of Boys & Girls in Tech.Inst And Their Members No. of Tech. Institue No of Seat Inst. I.T.I. Sonipat 2 868 (Boys & Girls ) I.T.I Ganaur 1 124 I.T.I.Gohana 1 228 Samaj Kayan Sabha 1 48 Gohana(Girls) Govt. Inst.of 1 518 Engg. Sonipat C.R.State Collage 1 240 of Engg.Murthal

AGRICULTURE

Total Geographical Area 213 Hects.(000) according to village Forest 7? Barran & un cultivable 8? land. Land put to Non13 ? Agriculture uses. Culturable waste land 1? Parmanent Pasture & other 2? grazing lan Misc. trees & groves 5? Current Fellow land 2? Net area sown. 175 ? Area sown more than once 108 ? in a year. Total Cropped area 283 ?

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Cropping Pattern(ooo)hect. Food Grains 1. Rice 2. Wheat 3. Jowar 4. Bajra 5. Barley 6. Maize Total Cereals Pulses 1. Gram 2. Moong 3. Arhar 4. Urd 5. Masar 6. Peas Total Pulses Sugar Cane Fruits Mango Vegetables 1. Potato 2. Sweet Potato 3. Onion 4.Other Veg. (kharif) Total Veg. Spices 1. Red Chilly Cotton 1. Desi 2. American Oil Seeds 1. Ground Nuts 2. Tarmira

Irrigated 77 138 11 5 231 2.0 2.0 8.5 1.0 0.4 0.2 0.6 1.2 0.2 0.6 0.2 -

Unirrigated 1 1 2.6 4.6 0.2 0.2 -

Total 77 139 12 7.6 Less Than 50 Less Than 50 235.6 0.2 2.0 2.2 8.5 1.0 0.4 0.2 0.6 1.2 0.2 0.6 0.2 -

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3. Sarson Total Oilseeds

2.0 2.0

1.8 1.8

3.8 3.8

IRRIGATION

Net irrigated area by source (00.Hects) 1750 i) By Canal Total 830 Sonipat 368 Kharkhoda 103 Ganaur 100 Gohana 259 ii) Tube-Well Total 920 Sonipat 265 Kharkhoda 113 Ganaur 143 Gohana 399 Gross Irrigated Area (hects) 2770 Sonipat 1132 Kharkhoda 310 Ganaur 396 Gohana 932 No. of Tube-Well & Pumping Sets.2001-02 i) Diesel Sets 25228 ii) Electric Sets 15591 Total 40819 No. of Tracters 2001-02 Total 13369

FISHERIES

Area stocked for fishculture Fishing licence issued (No)

759.0Hects. 51

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Total receipts from 82082000 fishries(Rs) No. of cases deducted 9 without licence Compensation 220 realized(Rs) Sale of confiscate fish(Rs) Fish production(Tonnes) -

FOREST

i. Reserved ii. Protected iii. Un-classified iv. Gross under land preservation Act v. Closed under Indian Forest Act Total Forest Area

Nil 71( in Sq.kms.) 3 74

HEALTH AS ON 31.3.2002

Health Department Rural No. of Hospitals No. of C.H.C. 2 No. of P.H.C. 23 No. of Dispensaries 5 No. of Sub-Centres 110

Urban 1 3 3 10 -

AYURVEDIC AS ON 31.3.2002

No. of Dispensaries. i) Unani ii) Patients treated iii) No. of Vaidas,

21 2 146441 19

40

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Doct/Hakim iv) No. of Dispensers

23

ANIMAL HUSBANDARY

a) Veterinary/Civil Dispensaries i. Veterinary 40 Hospitals(CVH) ii. RAIC 1 iii. C.V.D 70 iv. SMC/KVC 4 v. Sheep whole extension centers vi. Poultry/Piggery 1 vii. Horse breeding center viii. Poly.Clinic 1 b) Staff of Veterinary Institution 2001-02 i. Vety. Surgeons 44 ii. VLDA 123 iii. Dressers 1 iv. Other Class IV 184 c) Work done in the Vety.Institution 2001-02 i. No. of cases treated 273000 ii. Casteration performed 324 iii. Vaccination done RP HS BO Sheep Pox Foot Mouth Fever Others

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Nil 466000 -

18000

29000

200

Nil

(d) Mortality Amongst Livestock Due to Contagious Diseases

CO-OPERATION AS ON 30TH JUNE,2001

No. of Co-opratives Societies & their members. Nos Members 694 270614 a) Credit Societies i) No. of primary Agr. 145 Societies. ii) No. of Agr. Credit 23 Societies Total 168 b) Non Credit Societies i. Milk Supply 67 ii. Weaver 16 iii. Consumer Societies 4 iv. Housing 21 v. Women 1 vi. Primary Agr.Land Dev. 5 Bank vii. Agriculture 2 viii. Marketing 4 ix. Pry.Coop.Bank 1 Societies x. Other Societies 405 Total 526 A. Loan Adv. By 18966.64 Co-op Bank B. Loan Adv. By Pry. 15684.84 Agr. Cr. Soci. C. Loan advance by Non-11560.69 152000 12000 164000

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Agri.Soci.

BANKS

i) No. of Commercial Bank ii) No. of Co-Op. Banks iii) Primary Land Dev. Banks iv) Haryana Financial Corpn.

78 18 5 -

WELFARE

No. of Beneficiaries Assisted by DM. i. HHKN, Sonipat ii. DM Haryana Backward Class Nigam iii. DM Haryana awomen Dev. Sonipat iv. Distt. Welfare Officer,Sonipat v. No. of Persioners in the Sonipat. a) Old Age Pensioners Male Female Total

No. 376 129 70 615

Assistance(in Lac) 89.77 20.50 29.55 23.16

37109 29969 67078

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b) Widow c) Physically Handicapped Male Female Total

21438

3041 2550 5591

Total Pensioners of all 94152 Kinds

EMPLOYMENT

i. No.of Employment Exchange ii. Registration iii. Placing iv. Vacancies Notified v. Vacancies filled in vi. Vacant vii. Summition No. of Unemployment Person in Live register.

5 13053 316 24 9 213 778 38614

STAFF POSITION AS ON 31 ST MARCH ,2001 IN DISTT. SONIPAT

Class Type Class I Class II Class III Class IV Contg. Staff Total Staff

Male 112 431 8510 3186 423 12663

Female 26 109 2792 438 2065 5430

Total 138 540 11302 3625 2488 18093

LENGTH OF ROADS MAINTAINED BY PWD(B&R)

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i. National Highway ii. Surfaced Road iii. Other(ByXEN,Marketing Board) Total

64 K.mtr 977 K. mtr. 34 K. mtr. 1075 ?

POST OFFICES

No.of Post Offices as on 31st March 2002. No. of Telephones S.T.D. Local Call Office Panchayat Telephones Telegraph Offices Telephone Centres

179 38241 175 91 304 Urban Rural 50 1 2

GENERAL ECONOMY There are two major agriculture seasons, the rabi and Kharif. People grow mainly wheat, sugar cane, gram and some other fodder crops during rabi season. They are sown in October, November and harvests between mid March and April. The Kharif season consist of Jawar, Bajra, pulses sugarcane and cotton. These crops are sown June- August and repeated in OctoberNovember. SOCIAL CHARACTERISTICS There are 12 castes in village Kharkhoda. They are Jat, Brahman, Nai, Chure, Dhanak,Chamar, Maniyar,Blacksmit,Kumhar,Jhimer,Heri and Khati. Jat is 45

46 dominated caste in village. The village has a variety of castes that do their different traditional work. But due to some factors of late they are changing their work; mostly, engaged in agriculture. In agriculture can mean a variety of things such as land owner and labor etc. All members of the family may have different occupations; women are supposed to look after their children and may also take some part in agriculture. These occupation practiced by high castes are regarded high manual labour is looked down upon as town peoples occupation such as Chamar, Kumhar, Khati , Chure and Dhanak etc. The serving castes are paid in grain at the times of harvesting on occasion like the birth of a son and marriage in case of higher castes. Some Jat landowners work themselves in their field and do most of the routine jobs. This is an old tradition in this area, still for a variety of reasons agriculture cannot be carried on without the help of hired labour. First, certain operation such as housing and harvesting are highly labour intensive and they need to be completed within a short span of time. Secondly in recent years farm machinery has been adopted extensively but due to the simultaneous intensification of agriculture the demand for labour remains virtually unchanged. Thirdly, many large farmers particularly, those with small families have to depend on hired labour to carry on agricultural operations. Of the 125 households in the village of my study 25 are landless labourer, landed labour 45, small farmers 35, medium farmers 15 and large farmers 5. The main occupation of the heads of all these households is agricultural work. The farm work is their principal occupation and they seek outside employment only during the slack season. Given the nature of agriculture there are times when demand for labour is low. During these periods, most labourers supplement their income by working outside agriculture either in the village or in a city. Some engaged in stable activities such as dairy, road construction and wood cutting. But all the supplementary interests are geared to the agricultural cycle. In other words, the labourers return to agricultural work when it is available. Only male members of these labour families work as agricultural labourers. During busy seasons such as housing and harvesting season, which is more remunerative, a large number of men who normally work outside the village are attached to the agriculture. At the time many women of agricultural labour households also go to work in the field not on a daily wage, but as contract basis a great deal of harvesting is done on contract basis i.e. a man contracts to harvest a field for a fixed payment per acre of 30 % of the total crop. Those who have passed primary education have virtually lost their ability to read and write due to lack of opportunities to use their knowledge, so they take much loan and the village as a whole, literacy among our respondents is low. But the trends among educated get less loan and they do any job. However, no member of this group has acquired college education which has become quite common among Jats and other high casts.

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Kharkhoda (Haryana) Kharkhoda city

Kharkhoda Location of Kharkhoda in Haryana and India 2831N 7630E28.52N 76.5ECoordinates: 7630E28.52N 76.5E India Haryana 2831N

Coordinat es

Country State

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48 District(s) Sonipat Populatio 18,758 (2001) n Time zone IST (UTC+05:30) Kharkhoda is a city, the administrative headquarters of Kharkhoda Tehsil and a municipal committee in Sonipat district in the Indian state of Haryana.In kharkhoda there is a temple of lord shiva which is very popular within the connected villages at the time of shivratri a large number of tourists comes for visiting the temple. Geography Kharkhauda is located at 2831N 7630E28.52N 76.5E It has an average elevation of 207 metres (682 feet). Demography As of 2001 India census, Kharkhoda had a population of 18,758. As a Tehsil it contain 45 villages which had population of 160083. Males constitute 53% of the population and females 47%. Kharkhoda has an average literacy rate of 64%, higher than the national average of 59.5%: male literacy is 71%, and female literacy is 56%. In Kharkhoda, 16% of the population is under 6 years of age. 53% of the population is Saini, 15% is Brahman, 10% is Punjabi, and others are about 22%.Its current population is about 21,302. Kharkhoda can be made subdivision after ongoing census of India. It said to derive its name from Kharak, meaning a stall. Another tradition connects it with Khara and Dushana, the brothers of Ravana, the rakshasa king of Lanka (now Sri Lanka). It is located 16 miles to the west from nearby city, Rohtak. Total distance between Kharkhoda to Sonipat is 19 km. It has an elected municipal body to run the municipal administration of the town, which also contains the headquarters of the tehsil of Kharkhoda. In this historical site, there is a tomb of Syed Sufi and his fair held annually. Also,there is a mandir which is very famous for Parwan ji Maharaj, a spiritual guru. The town nurses a number of places of public utility of which a college, a civil veterinary hospital, a civil dispensary, a post office and police station are worth mentioning. It is an important grain market.

48

49 Very soon Kharkhoda town is going to become Industrial Model Town. Also a new Civil Hospital is under construction at Thana Kalan Road. Also, the new roads are under construction up to the newly constructed bypass all over the town. ITI is also under construction on bypass. Here Mughal emperor, Aurangzeb constructed a Mosque, which is now ruined. In Pre Partition days, Kharkhoda was town of Muslim Syed Families , which are also called Mir. In 1947 they migrate to Pakistan. Famous Pakistani writer and researcher, Syed Qasim Mahmood, was born here References 1. ^ Falling Rain Genomics, Inc Kharkhauda. Fallingrain.com. Retrieved on 2012-06-14. 2. ^ "District Sonipat at a glance". sonipat.nic.in. http://sonipat.nic.in/statistics.htm. 3. ^ "Kharkhoda, Haryana, India". wolframalpha.com. http://www.wolframalpha.com/entities/cities/kharkhoda,_haryana,_india/ gl/s5/u1/. 4. ^ "Kharkhoda to be made subdivision". tribuneindia.com. 2011-02-21. http://www.tribuneindia.com/2011/20110221/haryana.htm#2.

THE SOCIO EVONOMIC CHARACTERISTICS OF SAMPLE FARMERS: For this purpose, the farmers of the village are divided into four size classes on the basis of ownership as under:1. Marginal farmers owing upto 2.50 acres. 2. Small farmers owing 2.51 to 5.00. 3. Medium farmers owing 5.01 to 10.00 acres. 4. Big/large farmers owing 10.01 and above. From each size group of holding, a sample of farmers was randomly selected in proportion to the number of farms in each group so as to form a total sample of 100 farmers and 25 landless labourers. Data have been collected through pre- tested questionnaire and interview with the farmers and landless labourers. Data for one agricultural year (1992-93)

49

50 have been collected. The sample households were interviewed with structured questions, money lenders (who are mostly professional money- lenders) and traders (commission- agents in sample villages with whom the sample farmers have led credit and other input transactions). It is interesting that most of the money lenders belong to upper castes. There is primary agriculture co- operative society in village Kharkhoda. The primary agriculture development bank is at 3 Km from the village. There are two commercial bank branches in the radius f 5 km from the sample village and there are also three other commercial bank branches at Meham town to which farmers can approach for loan, infrastructural facilities like roads is fairly developed in Rohtak district. Besides with in approachable distance (1 km) there is a sugar mill , where in the possibility of getting employment. However, there are some industries in Meham. DISTRIBUTION OF FARMS AND AREA ACCORDING TO SIZE OF SAMPLE HOUSEHOLDS: The size distribution of farmers has been given in table 3.1. It is seen that marginal and small farmers from 80 % of household owing 35% of the area owned, on the other hand medium and large farmers constitute 20 percent of the farm households but own 65 % of the area owned. It is clear that the lions share of the land owned is owned by the medium and large farmers.

TABLE 3.1

SIZE OF DISTRIBUTION OF FARMS AND AREA ACCORDING TO SIZE GROUP OF HOLDING

Size group of holding 1 Upto 2.50 2.51 to 5.00 5.01 to 10.00 10.00 and above Total Source: Field survey.

Number of Households 2 45 35 5 5 100

Percentage of households in the group 3 45.00 35.00 5.00 5.00 100.00

Percentage of area owned 4 15.00 20.00 35.00 35.00 100.00

In Table 3.2 we discuss the family size, family workers and average area of land owned per family worker. It is evident from table 3.2 that the average size of family decreases with the rise in the status of farmers. But the percentage of 50

51 family workers as percentage of family members decreases with the rise in the status of farmers. In view of this the large farmers have to higher farm labour to their work. The area owned per family member rises with the rise in the status of farm households. The table 3.2 also shows that average size of family of marginal farmers as compared to large farmers. We can say that the average area family workers are higher for large families as compared to small and marginal families. At last the farms servants are kept only large farmers.
TABLE 3.2

DISTRIBUTION OF SAMPLE HOUSEHOLDS, FAMILY WORKERS AND DEPENDENT FAILY WORKERS PER HOUSEHOLD AND FARM SERVANTS BY SIZE GROUP OF HOLDING

Size Group of Holding(acre s)

Total Number of Househol ds 2 25 45 35 15 5 Survey.

Average Size of Family

1 Landless Laborers Upto2.50 2.51 to 5.0 5.01 to 10.0 10.01 and above Source: Field

3 4.00 5.42 5.51 6.00 7.00

Family Workers as Percentag e to Total Family Members 4 51.35 40.74 49.2 40.00 20.00

Family Workers as per Househol d 5 3.04 3.02 3.01 2.67 2.24

Average area owned per Family Worker 6 0.40 1.22 1.79 6.34

Farm Servants per House

7 0.34

TABLE 3.3

CASTE STRUCTURE DISTRIBUTION OF FARMS ACCORDING TO CASTE BY SIZE GROUP OF HOLDING

Size Group of Holding(Acres) 1 Landless Laborers

Total No. of Households 2 25

Percentage of the Total to Scheduled Backward Upper Caste Caste Class 3 4 5 60.00 40.0

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52 Up to 2.50 45 2.51 to 5.00 35 5.01 to 10.00 25 10.00 & above 5 ALL FARMS 100 Source: Field Survey. 11.11 8.57 4.00 24.00 55.54 71.14 80.00 90.00 76..00

In table No. 3.3 cast of farmers is classified into three categories namely, scheduled caste, backward class and upper caste depending upon their caste status. The upper castes are the dominated caste in our study areas because of their economic position which is good due to their assets like land. They use their power to exploit the landless and small farmers. But in our study area backwards classes are also posses land asset. The percentage of share of S.C. regarding land holding is negligible. The table shows that the scheduled castes have no land. But in terms of the upper caste have more land in terms of percentage) as compared to small farmers.

EDUCATIONAL LEVEL:The distribution of farmers by size group according to educational level of head of households is shown in table 3.4.
TABLE 3.4

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D I S T R I B U T I O N O F F A R M E R S T O T H E SI Z E G R O U P O F H O L D I N G A N D E D U C A T I O N A L LEVEL

Size group of Holding(acre s) 1 Landless Laborers Up to 2.50 2.51 to 5.00 5.01 to 10.00 10.00 & above ALL HOUSEHOL DS Source: Field

Total no of Households 2 25 45 35 25 5 100 Survey

Illiterate

3 14 (56.00%) 22 (48.89%) 18 (57.43%) 4 (26.67%) 1 (20.00%) 45 (45.00%)

Up to Primary and Below Middle 4 6 (24.00%) 13 (28.89%) 9 (25.71%) 7 (46.67%) 1 (20.00%) 31 (31.00%)

Above Primary and Below Middle 5 4 (16.00%) 7 (15.56%) 6 (17.11%) 3 (2.00%) 1 (20.00%) 17 (17.00%)

High School and Above 6 1 (4.00%) 3 (6.67%) 2 (5.71%) 1 (6.67%) 1 (20.00%) 7 (7.00%)

NOTE: figures in the brackets denote percentage number.

It is clear from the table that illiteracy among the marginal, small, medium and big farmers is 56.00 %, 48.89%, 57.43%26.67% and 20.00 % respectively. The table shows that as land increases the education also increases. Clearly the large and medium farmers have highest educational background.

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SUMMARY
This chapter provided a brief description of the socio economic background of the study area including the district of Sonepat and Haryana in which the study area is located. It has been found that Haryana has done well in the provision of infrastructure and credit in the rural area even their farmers borrow from informal sources. The socio economic background of the area farmers shows that Haryana is a developed area. It will be interesting to know how the credit institutions are functioning in a micro region.

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CHAPTER IV

FORMAL CREDIT SYSTEM IN THE VILLAGE

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In this chapter I will discuss the system of credit agencies in the formal sector and over dues problem in the village. First the borrowings of households are discussed below: Table 4.1 , it is based on the responses of households that borrow from different sources. The percentage of households borrowing from only institutional source increases with the rise in the status of farm households. This percentage is very low for landless 4.00% and marginal farmers 5.7 % following by small farmers, but high for medium 26.67 % and large farmers 40.00% respectively. Conversely, the percentage of households borrowing only from informal source is very high (68.00 %) for the landless, marginal and small farmers and very low for medium or large farmers. Further more, the proportion of households borrowing from both sector is high among medium (46.67 %) followed by small and marginal farmers. Thus the large farmers are borrowing more from formal sector. On the other hand the marginal and small farmers have borrowed both from informal sector and formal sectors. It appears that those households who have received very low amount of credit or no creduit from formal sector have to borrow from the informal sector.
TABLE 4.1

PARTICIPATION IN THE CREDIT MARKET BY SOURCE OF CREDIT (PERCENT OF BORROWING HOUSEHOLDS)

Farm Size of Group 1 Landless Laborers Marginal Farmers Small Farmers Medium Farmers Large Farmers

Formal Only 2 4.00 5.70 20.00 26.67 40.00

Source of Credit Informal Both Only 3 4 68.00 5.00 60.00 36.00 13.33 20.00 14.21 32.00 46.67 20.00

TOTAL Not Borrowing 5 20.00 20.00 12.00 13.33 20.00 6 100.00 (25) 100.00 (35) 100.00 (25) 100.00 (15) 100.00 (5)

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57 Source: Field Survey NOTE: (Figures in brackets represent total number in group)

TABLE 4.2

PROPORTION OF BORROWING AND AMOUNT OF BORROWING PER BORROWING HOUSEHOLD FROM DIFFERENT SOURCE

Farm size group

Proportion of formal loan to total loan

Proportion of informal to total loan 3 75 48 30 15 10 35

1 2 Landless 25 laborers Marginal 52 farmers Small 70 farmers Medium 85 Farmers Large 90 farmers OVERALL 65 Source: field survey

Percent of loan (formal borrowed by the group to total loan) 4 2.50 8.00 15.50 34.00 40.00 100.00

Percent of loan (informal borrowed by group to total loan) 5 14.45 20.30 18.70 23.00 23.55 10.00

Amount of formal loan per borrowing household s (in Rs.) 6 1500 1800 2150 3675 7500 3500

Amount of informal loan per borrowing household s (in Rs.) 7 600 900 1230 1500 3050 670

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TABLE 4.3

DISTRIBUTION OF CREDIT BY PURPOSE AND SOURCE ACCORDING TO FARM SIZE I N K H A R K H O DA ( P E R C E N T A G E F A R M SI Z E G R O U P )

Purpose

1 Short term producti on Long term producti on Consump tion Medical Social Others

Landless laborers Infor For mal mal 2 3 -

Marginal farmers Infor For mal mal 4 5 35 75

Small farmers Infor For mal mal 6 7 15 85

Medium Farmers Infor For mal mal 8 9 9 90

Large farmers Infor Form mal al 10 11 68

80

25

15

10

32

65 35 10 -

20

30 20 10 100 -

35 26 20 100

100

30 60 100

100

17 80 100

100

TOTAL 100 100 Source: field survey

100

Allocation of finance from both sectors is shown in Table 4.2. Large farmers obtained more (40.00%) of the total institutional credit; while poorer farm house holds, that are landless, marginal and small households obtained 2.50,

58

59 8.00 and 15.50 % respectively. About 60 % of informal credit has gone to the poorer farm households, the rest being shared by medium and large farmers. It is noteworthy that the amount of loan borrowed per borrowing households increases with the rise in the status of farm households in both sectors of the credit market. The amount borrowed by large farmers is about 9 times that of marginal farmers. By contrast, the large farmers have obtained to the purpose of credit which was more that their need for production purposes (see also Sarap. K, 1987) has been spent for other purposes (cf. Lipton, 1976). Table 4.4 shows that the percentage of household with over dues is higher among the marginal (60.12 %), a small farmer (72.14 %) and large farmers (75.15 %) respectively. However, in terms of amount it was higher among large farmers 5580 Rs/-. Nearly 22.02 % the total default of institutional loan was due to large farmers. It shows that the large farmers borrowing money because of their political connection and dominance or formal credit institutions (especially in primary agricultural societies). They have also managed postpone repayment of loans for a long period. It is clear that a major portion of the default of formal loan was due to large farmers only. Table 4.3 shows that the institutions do not give consumption loans even though there is some provision for poorer households. A major portion of the institutional loan is used as working capital by all groups of farmers; the rest being used for capital expenditure for purchase of live stock and machinery by medium and large farmers. Borrowing from non institutional sources is used for a veriety of purposes. This source of loan is important for landless labourers and marginal and small households. In case of landless borrowers, most of the credit is used for consumption, followed by medical and social purposes. Informal loans for production are important for marginal and small farmers. About 50 % informal loans borrowed by marginal farmers are utilized for production purposes. In the case of small farmers it is about 35 % of total informal loans, the rest being used for consumption and medical purposes. The medium and large farmers allocate most of the informal loan for social purposes, followed by medical purposes. To the extent that access to institutional credit is limited for poorer farmers; they have to make up the deficit of working capital from informal sources. It is noteworthy that in the case of borrowing form informal sources, loans are purpose specific. On the other hand, a portion of credit obtained from institutions.
TABLE 4.4

PERCENTAGE OF DEFAULTERS AND OVERDUE ON FORMAL CREDIT

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60 Farm size group Defaulters as percentage of total borrowers 2 40.00 49.30 48.00 33.00 60.00 52.00 3 1512 2270 2409 4700 5580 3240 Average amount of overdue per defaulter (In Rs.) Overdue as percent of total credit borrowed by the group 4 35.01 60.02 72.14 42.00 75.15 65.02 Percentage of loan defaulter by the group to total loan defaulter

1 Landless laborers Marginal farmers Small farmers Medium Farmers Large farmers OVERALL

5 2.00 15.27 24.02 22.02 36.71 100.00

TABLE 4.5

PERCENTAGE OF OVERDUES AND DEFAULTERS ON FORMAL CREDIT

Farm size group

Defaulters as percentage of total borrowers

Average amount of overdue per defaulter (In Rs.)

Overdue as percent of total informal credit

Percentage of loan defaulter by the group to total loan defaulter

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61 borrowed by the group 4 60.00 83.12 63.12 15.70 50.00

1 Landless laborers Marginal farmers Small farmers Medium Farmers Large farmers OVERALL

2 12.00 15.00 25.00 14.00 14.00

3 334 540 820 1200 650

TABLE 4.6

5 20.00 50.00 22.27 7.73 100.00

SOURCE DISTRIBUTION OF OVERDUES

Sources

No of borrowi ng househ olds

No of househ olds with overdue

Percent age of default ers in group

Amou nt of borro wing in Rs.

Amoun t of overdu e in Rs.

1 Primary agricultur al credit societies Primary land develop ment bank Commerc ial banks TOTAL

2 86

3 56

4 94.92

5 61637 6 12520 0

6 512672

Percent age of amount of overdu e to amount borrow ed 7 83.13

Percent age of overdu e to total overdu e in group 8 87.35

3.89

62570

49.97

10.66

3 95

1 59

1.69 100.00

22775 76471 1

11650 58689 2

51.15 76.75

1.99 100.00

The table 4.5 shows that informal debt is more for poorer households. It is to be used that debt is important because one has to pay interest charges. The table 61

62 reveals that the over dues and percentage of defaulted marginal and small farmers is 83.13 % and 63.15 or 50.00% and 27.27 % respectively. It is clear that the default of informal loans more in the case of poor farmers who are marginal and small farmers. Thus we get a contrasting picture of borrowing and over dues of formal loan. The medium and large farmers have borrowed more and defaulted also more amount of loan from formal institutions, on the other hand the marginal and small farmers have borrowed low amount loan from formal credit institutions but defaulters. Further the marginal and small farmers have borrowed from the informal sector and defaulted to these lenders there they have to pay interest charges which are generally high. SOURCEWISE DISTRIBUTION OF OVERDUES: In our study area, the farmers have taken loan from different sources f PACS, LDB and commercial banks. But sometimes, they have not fulfilled their amount to credit agencies. There are many factors responsible for it. The Table 4.6 shows that 94.92 % defaulters are from the primary agricultural societies and LDB 3.89 and 1.69%. But in our study area the total amount is taken by PCAS as compared to other agencies like land development bank and commercial banks is maximum. Thus the maximum amount of default of majority of farmers is due to PACS which the dominant credit institutions are providing credit in the rural areas.
TABLE 4.7

DISTRIBUTION OF OVERDUES BY SOCIAL GROUPS

Castes

No of borrowi ng househo lds

No of househo lds with overdue

Percent age of default ers in group

Amount of borrowi ng in Rs.

Amou nt of overd ue in Rs.

1 Upper caste Backwa rd classes

2 87 6

3 54 4

4 91.50 6.78

5 512729 223724

6 38151 6 18944 4

Percent age of amount of overdue to amount borrowe d 7 74.06 84.68

Percent age of overdue to total overdue in group

8 65.01 32.28

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63 Schedul ed classes TOTAL 2 95 1 59 1.68 100.00 28258 764711 15932 58689 2 62.65 76.75 2.71 100.00

CHAPTER V

STRUCTURE AND PERFORMANCE OF INFORMAL SECTOR CREDIT

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INTRODUCTION The purpose of this chapter is to examine the structure and performance of informal sector credit in the village of our study. We discuss the following: 1. The differences in the characteristics of the households which participate in the informal sector credit market and the purpose for which credit is obtained. 2. The types of collateral securities offered. 3. Other terms and conditions of borrowing including the rate of interest paid on different type of collateral securities.

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SECTION- I This section reviews the theoretical framework relating to credit market. Over the past few years a large number of studies, both theoretical and empirical, have appeared on rural credit markets. One important trend in the literature is to view the relationship between the lenders and the borrowers as a form of exploitation of less powerful agents (for example, small borrowers) by more powerful money lenders (Bhaduri, 1973, 1977.1983.51-68). The unequal power relation between lender and borrower arises from the latters regular need for loans for survival and such dependence of borrowers continues as long as borrower remains sufficiently poor and without any alternative and dependable source of borrowing (Bhaduri 1986 a; 189; Rao;1980). Credit from informal sources is given for any purpose. Normally people borrow from money lenders for social function such as marriage of son and daughter or other purposes. Loan is given to the house holds in the informal sector on the basis of certain features like their occupation and family features, size of cultivable area and tenurial status etc. , collaterally given to the lenders.

STRUCTURE OF INFORMAL CREDIT INSTITUTIONS:

During the field survey the following non- institutional credit agencies were found operating in the rural areas: (a)Professional Money Lenders:

There are two types of money lenders in rural areas viz.(1) Traditional or professional money lenders (2) Non professional or agricultural money lenders.

A professional or traditional money lender is one, whose main occupation is money lending. But a non- professional or agricultural money lenders is one, whose main occupation is farming, but who combines money lending with it. They do money lending as side business. They met major portion of the credit needs of the farmers short term and long term and for productive and unproductive purposes. They charge higher rate of interest which varied from 24 to 36% per year.

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66

(b)Commission Agents:

There is no clear cut distinction between professional money lenders and commission- agents. Commission agents generally supply credit to the farmers, before the crop season starts. They often persuade the farmers to sell their produce at a lower price and generally charge a high commission for their service. The rates of interest charged y commission agents varied from 20- 30 % per annum.

(c) Agricultural Money Lenders and Sahukars:

Agricultural money lenders form another source of farm credit. Small farmers and tenants depend on this source to meet their credit needs. This source of finance has all the defects associated with village moneylenders. In such cases, he takes the thumb impression of the borrower on a blank paper and enters in it the sums larger than actually lent. He makes several illegal deductions from the amount of loan. Further, he charges high rate of interest. Thus the sahukars and agricultural money lenders exploit the small farmers and tenants in several ways. The landless labourers are forced to become bonded labourers.

(d)Relatives and Friends

Relatives and friends are an important source of farm credit. These loans are generally contacted in an informal manner. It carries low or no rate of interest and the amount is returned soon after the harvest. However, this source of finance is very much uncertain and the majority of the farmers cannot depend upon this source to meet the needs of the modern agriculture.

From the table 5.0 it is clear that the professional money lenders (36.67%) and Sahukars(46.67%) play a significant role in advancing credit. But the role of relatives and friends are less as compared to other

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67 sources of credit. But percentage age of over dues to total over dues is higher for agricultural money lenders as compared to others.

TABLE 5.1

S O U R C E W I S E D I S T R I B U T I O N O F I NF O R M A L C R E D I T I N T H E S A M P L E V I L L A G E

Source of credit

No of borrowi ng househ olds

No of defaulti ng househ olds

Percen tage of default ers in group

Amoun t of borrow ing in Rs.

1 1

2 15

3 11

4 36.67

Professio nal moneylen ders 2 Commissi on agents 3 Sahukars and agricultur al moneylen ders 4 Relatives and friends TOTAL

5 62570

Percen tage of amount of overdu e to amount borrow ed 6 7 35209 56.27

Amo unt of over due in Rs.

Percent age of overdu e to total overdu e in group 8 36.12

5 20

3 14

10.00 46.67

15730 78970

8072 47500

51.32 60.14

8.28 48.73

4 44

2 28

6.66 100.00

14700 17197 0

6700 9748 1

4.56 56.68

6.87 100.00

TABLE 5.2

DISTRIBUTION OF INFORMAL CREDIT BY SOCIAL GROUPS

Castes

No of borrowi

No of househo

Percent age of

Amount of

Amou nt of

Percent age of

Percent age of

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68 ng househo lds lds with overdue default ers in group borrowi ng in Rs. overd ue in Rs. amount of overdue to amount borrowe d 7 50.78 52.71 54.61 51.98 overdue to total overdue in group

1 2 Upper caste Backwa rd classes Schedul ed classes TOTAL

3 15 6 11 32 9 2 7 18

4 50.00 11.11 38.89 100.00

5 115600 36800 42300 194700

6 58700 19400 23100 10120 0

8 58.02 19.16 22.82 100.00

Source: field survey It is clear from the table 5.1 that upper caste farm households have better credit worthiness in the informal credit market and they can get loan at short notice. They dominate the credit market because of their economic position, land asset ratio etc. But the scheduled caste and backward class have less credit worthiness in the market. They have got loan at higher rate of interest as compared to the higher castes borrowers. It is clear from table 5.2 that the percentage of defaulters and percentage of over dues in the group of upper caste is 50% and 58.02% respectively. As compared to this, it is lower in case of scheduled caste farmer viz 38.89 % and 22.82% respectively. Clearly the backward and scheduled caste farmers have received lesser amount of credit. But their repayment performance is better as compared to the upper caste borrowers as seen from the default of loan by different groups. SECTION - II

TERMS AND CONDITIONS OF BORRWOING OF INFORMAL LOANS:

This section discusses some aspects of terms conditions of borrowing. These are (a) Types of collateral securities offered by borrowers (b) The rate of interest charged by lenders for different groups are collateral securities offered by the borrowers.

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ROLE OF COLLATERAL SECURITY

The lenders collateral requirement and certain borrowers lack of suitable collaterals play an important role in determining the types of contracts in which borrowers are engaged. A householders barging strength reflected in the credit terms it can obtain. The time upon which credit can be obtained depends on the type collateral the borrower is in a position to offer and elasticity of loan, which reflects the purpose borrowing.

INFORMAL BORROWING ACCORDING TO COLLATERAL SECURITY:

Loan availability depends on the types collateral security offered by the borrowers. In the marketable collateral (for example, land, plot, house etc) borrowers face less difficulty in getting loan. In the absence of such assets, borrowers would borrow less. The borrowers may also attempt to move to collateral substitutes. One such substitutes third party guarantees. The lender can ensure the repayment of loan through some informal control of borrowers via a third party who has more information regarding the borrowers. The third party may have a relationship with the lender other than of borrowing transaction. In such a triangular relationship the lender can minimize default of loans and earn interest income of the loan.

Land:

When land is employed as security the use of the land is transferred to the lender. Land is mortgaged to the lender under different conditions. In the cases of ordinary mortgage of land the borrowers transfers the right of the use of land to the creditor until repays the amount of loan (principal only). But the poorer households may not use land as a form of security since it is their major source of livelihood.

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70 Products:

The sale of the crop to the creditor is another form of collateral used by poorer households to obtain loan. It is also a form of tied transaction in which the borrower is supposed to sell the crop at prevailing prices. The information on various forms of collateral securities used in the survey area by borrowers is presented in table 5.3.

In the case of marginal and small farmers 28% and 26.67% respectively of loan contracts are with some formal securities. And it is 23.33 and 21.4% in the case of medium and large farmer respectively. Thus the percentage of loan contracts with some form of security falls with the rise of in the status of farm households. Of the total loan contracts with securities land is used more by farm households, represents between 80 % and 83.3 % among marginal and small farmers.

TABLE 5.3

DIFFERENT TYPE OF COLLATERAL AND LOAN CONTRACTS WITH AND WITHOUT ANY INTEREST IN THE FORMAL CREDIT MARKET

Types of collateral Margin al farmer s 2 14 28% 80% 20%

1 1. Total no of loan contracts 2. Percentage of loan contract with some form of collateral 3. Percentage a) Land of above with b) Products collateral as: TOTAL: (a+b) 4. Percentage of loan without contracts

Farm size groups Small Mediu Large/Bi farmer m g s farmer farmers s 3 4 5 8 7 3 26.67% 23.33% 21.4% 83.33% 16.67% 81.25% 18.75% -

100.00 % 20%

100.00 % 37%

100.00 % 64.50%

100.00 % 77.89% 70

71 5. Percentage of loan without any interest to total loan

SOURCE: FIELD SURVEY.

4%

18.75%

21.00%

66.67%

RATE OF INTEREST PAID ON DIFFERENT COLLATERAL ASSETS:

We have seen that a majority of poorer households have obtained loan from the informal credit marked. Sometimes, some of them can get loan without paying interest or at low rate of interest. During the field investigation it was all observed the poorer farm households have to pay much higher rates of interest on informal loans as compared. And the burden of informal debt for poor farm households is much higher than for rich borrowers. We have calculated rates of interest on loans borrowed according to the source and this is shown In table 5.4. The average rates of interest charged by money lenders and commission agents and landlord are higher than rates charged by friends and relatives. Most of the loans of marginal and small households have come from these two sources (money lenders and landlords). Obviously these loans are explotative character and the burden of these loans is higher than these groups than for medium and large farmers. So they have paid interest rates which are much higher compared to the rates paid by larger farmers.

TABLE 5.4

SOURCE OF BORROWING ACCORDING TO SIZE CLASS OF FARMERS IN THE SAMPLE AREA

Farm size group

Professio nal money lenders

Commiss ion agents

Landlor ds

Relati ves and friend s 5 -

Agricult ural money lenders

1 1. Marginal

2 3

3 4

4 2

6 2

Total number of borrowi ng househo lds 7 11

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72 farmers 2. Small 2 farmers 3. Medium 2 farmers 4. Large 1 farmers AVERAGE 8 Source: field survey.

2 1 7

2 3 7

1 1 4 6

1 1 4

8 8 5 32

CONCLUSION

On the whole, it has been found that several non- institutional agencies including professional money lenders, commission agents, agricultural money lenders relative and friends have been active in the study are for providing loans to different categories of far households. The loan was given for a variety of purposes including consumption, social and productive purposes. In the study area, a majority of the marginal and small farmers 65% were defaulters. The poorer farmers have not been in a position to repay the loan in time. On the contrary, the medium and large farmers have been able to repay the informal loan. The lenders earn interest income from the poor farmers.

The use of collateral by different categories borrowers showed that the majority of households have given collateral to the lenders which obtaining loan. Moreover, the marginal and small farmers have to pay higher rates of interest as compared to the rates paid to large farmers.

Our analysis show that in spite of the growth formal credits in Haryana it has been in a position replace the informal lenders. The informal sector credit has owed its business and provides credit with a variety of purpose. However the growth of formal credit has injected competition among the money lenders and the terms and condition of getting credit. In the information sector has become less exploitative. The rates of interest charged by the money lenders has been lower now as compared to the rates during the 1960 s of earlier thus the spread of formal credit

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73 intuitions in rural areas especially in Haryana has a positive impact of different categories of borrowers.

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CHAPTER- VI

SUMMARY AND CONCLUSION

74

75

75

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This chapter briefly summarizes the main findings of the study. In the first section the main findings of the study are given. In the second section the policy implications arising out of the findings are prescribed. In the first chapter I have presented the statement if the problem that I have investigated, stated the objectives of the study. The data base and study area have also been mentioned. This present study is based on secondary and primary data collected personally by me. The primary data has been collected personally by me from the village Kharkhoda in year 2010-11. The data relates to 100 farm hous;eholds and 25 labor households in the sample. The sample was drawn on the basis of random sampling method. Lastly the limitation of study has also been mentioned. Given the limitation of study has also been mentioned. Given the limitations of time and resource it is difficult from individual to collect and check the data from a large number of households relating to variety of transactions. In second chapter I have discussed about the credit institutions prevalent in the country and Haryana, The purpose for which credit is advanced by these institutions. It has been found that a variety of institutions like primary Agricultural cooperative societies, commercial banks, regional rural banks. In the formal sector provide credit to the farmers. In the informal sectors agricultural money lenders professional money lenders, commission agents, friends and relatives provide credit to different sections of the farmers. There has been significant progress in the provision of formal credit. It has been found that about 80 % of the total credit need of the farmers has been provided by the formal sector credit institutes. Despite this progress, a number of informal credit institutions provide credit to different categories of farmers. The informal sector provides credit for a variety of purposes especially to the poorer section of the community in the rural areas. The third chapter has discussed about the socio economic background of the sample farmers and the study area. The state of Haryana has a progressive character in terms of provisions of infrastructure in terms of road, irrigation facility, HYV varieties of seeds to the rural area. The socio economic characters of the sample farmers show that a majority of borrowers belong to higher cases as compared to the backward and scheduled castes. In the fourth chapter I have discussed about the structure and performance of formal credit. It has been found that majority of the medium and large farmers have received credit from the formal institutions. On the other hand a few small and marginal farmers have obtained loan from these institutions. What is important to note is that the poorer farmers who have lower income have better performance as compared to the medium and large farmers. Thus the medium and large farmers have postponed repayment of loan due to their

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77 higher resource caste and outside connection. In these institutions the over dues of PACS are more as compared to the other credit institutions. The fifth chapter has analyzed the performance of informal sector loan. Farmers belong to different groups and landless labor have borrowed loan from different agencies of the informal sector credit. It has been found that the over dues of all groups of households is lower in this sector as compared to the over dues position in the formal sector. It appears that the lenders are in a position to recover the loan from the different classes of borrowers through enforcing their contracts over the borrowers. Further it is noteworthy that in spite of a proliferation of formal credit institutions even in a developed area like our study area, the informal sector still carry on its business even though at a slower pace. The increase of formal credit institutions has injected competition among the lenders so that the terms and conditions of obtaining credit in the informal sector have become less exploited to the borrowers. The analysis of credit market from the study area suggests a number of policy implications. One of the important problems the formal credit institutions facing are the problem of over dues non repayment of loan especially by the medium and large farmers. Unless loan is recovered from these farmers the credit institutions cannot become viable and serve the rural areas property. In view of this loan should be recovered from these farmers.

The scheduled caste between should be encouraged to take loan and utilize properly so that they can generate more income for repayment of loan. The primary credit societies which are facing more problems of default should take special measure of recovery without political interference.

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