Incidence and Determinants of Indebtedness among Farmer Households in the Cotton Belt of Rural Punjab

Published by: Admin

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Authors: Mandeep Kaur, Ravita and Sarbjeet Singh

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Abstract

There is an old saying that Punjab farmers are born in debt, live in debt and die in debt. This study was assessed to measure the extent of debt; to find the nature, incidence and sources of debt; and to find out the factors determining debt among farmer households in the cotton belt of rural Punjab. The methodology of the study consisted of a research design including descriptive and quantitative data, which was gathered through schedules. A multistage stratified random sampling technique was employed to choose a sample size of 520 farmer households of different farm-size categories. The results highlighted that average amount of debt per sampled farmer household was Rs. 406970. The figure was the lowest (Rs. 182258) for marginal farmer households and the highest (Rs. 795444) for large farmer households, indicating considerable variations. Approximately 74.25 per cent of the debt was sourced from institutional credit. The marginal and small farmer households had incurred a significant proportion of total debt at exorbitant interest rates. The regression analysis revealed family size, ownership of land, expenditure incurred on purchasing farm inputs and inventory, unproductive consumption expenditure, and crop failure had a positive significant while farm income and ratio of earning members in the family were negatively related to indebtedness. Based on the analysis of this study, it was recommended that appropriate efforts must be taken to reduce indebtedness among the farmer households trough debt waiver, regulation of non-institutional credit sources, ensuring remunerative prices for agricultural produce, implementing land reforms and creating non-farm employment opportunities in rural areas.

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