CHAPTER 1 RESEARCH METHODOLOGY

Transcription

1 CHAPTER 1 RESEARCH METHODOLOGY Introduction: Agriculture plays a crucial role in the development of the Indian economy. It accounts 19 percent GDP and two-third of the population dependent on agricultural sector. The importance of farm credit as a critical input to agriculture has reinforced by the unique role of Indian agriculture in the macro-economic framework and its role in poverty alleviation. Recognizing the importance of agricultural sector in India s development, the Government and the Reserve Bank of India (RBI) have played a vital role in creating a broad-based institutional framework for catering to the increasing credit requirements of the sector. Agricultural policies in India have been reviewed from time to time to maintain pace with the changing requirements of the agriculture sector, which forms an important segment of the priority sector. Credit plays a pivotal role in agricultural development. Agricultural development and growth are possible only when adequate capital and proper technology are used. The changes in the technology of agriculture enhanced the need for credit. Credit also acts as a catalyst, to change the farmers mind set from traditional agriculture to modern agriculture. Credit provides a command over resources and needed liquidity to farmers who do not have sufficient funds to exploit opportunities. Modern agriculture requires considerable investment with both of recurring and non-recurring nature. The recurring capital is repetitive i.e., seeds, fertilizers, insecticides, labour etc.

2 The non-recurring capital is investment in agricultural implements, tractors, tillers etc. Majority of the farmers with small holdings and lack of assured irrigation are poor. They could not sustain from agriculture income alone. For such farmers, augmenting income from other economic activities is important for living. Thus, apart from agriculture credit, credit for non-farm sector activities also important and should be provided by rural credit agencies adequately. Creating the job for rural poor in the rural sector has important as not all poor farmers could be expected to augment non-farm income from non-farm activities. Meeting the total credit needs of farmers, therefore, should be the policy of institutional lending in the rural sector. Besides, the banks should also support adequately small sector, rural industries, agro-processing units etc. Institutional finance for agriculture in India dates back to 1793 when the system of taccavi loans initiated. Agriculture finance was given priority by the government for the rural credit system. Earlier the finance was provided to the farmers through the department grants as well as cooperative system. In the pre-independence period, agricultural credit to farmers was exclusively provided by cooperative banking system (1904). Such credit has no explicit relationship with input or farm investment and seen as an alternative to the village moneylender. The State Cooperative Agriculture and Rural Development Banks (SCARDB) then called the Land Mortgage Banks provided long -term loans to repay the old debts. Rural cooperative credit structure is an important and integral part of Indian banking system. It has played a decisive role in economic development of India especially of rural economy. Technical support by Punjab Agriculture

3 University and financial support by cooperative Banks are known to be two pillars of green revolution in India which took place in seventies of last century. A well-defined rural credit system has already been developed to meet Agriculture production oriented credit needs. However for other socio consumption needs Farmers are still dependent upon informal credit sources. To fill this credit gap cooperative Banks of Punjab have taken a lead in and have started providing Revolving Cash Credit Facility (RCCF) to farmers. This study makes an attempt to assess the impact of this new product line on socio economic conditions of farmers. In this article profile of borrowers has been studied to know various aspects of borrowers. Detailed analysis of social and economic impact of RCCF on life of borrowers has also been conducted in selected district central cooperative banks (DCCBs) of Kachchh District of Gujarat (India). A large proportion of the population in India is rural based and depends on agriculture for a living. Enhanced and stable growth of the agriculture sector is important as it plays a vital role not only in generating purchasing power among the rural population by creating on-farm and off-farm employment opportunities but also through its contribution to price stability. In India, although the share of agriculture in real GDP has declined below one-fifth, it continues to be an important sector as it employs 52 percent of the work force. The growing adult population in India demand large and incessant rise in agricultural production. But per capita availability of food, particularly cereals and pulses, in recent years has fallen significantly. As a result, slackening growth of agriculture during last decade has been a major policy concern.

4 Three main factors that contribute to agricultural growth are increased use of agricultural inputs, technological change and technical efficiency. With savings being negligible among the small farmers, agricultural credit appears to be an essential input along with modern technology for higher productivity. An important aspect that has emerged in last three decades is that the credit is not only obtained by the small and marginal farmers for survival but also by the large farmers for enhancing their income. Hence, since independence, credit has been occupying an important place in the strategy for development of agriculture. The agricultural credit system of India consists of informal and formal sources of credit supply. The informal sources include friends, relatives, commission agents, traders, private moneylenders, etc. Three major channels for disbursement of formal credit include commercial banks, cooperatives and micro-finance institutions (MFI) covering the whole length and breadth of the country. The overall thrust of the current policy regime assumes that credit is a critical input that affects agricultural/rural productivity and is important enough to establish causality with productivity. Therefore, impulses in the agricultural operations are sought through intervention in credit. In order to improve the flow of credit to the agricultural sector, the Reserve Bank had advised public sector banks to prepare Special Agricultural Credit Plans (SACP) in Under the SACP, the banks are required to fix selfset targets for achievement during the year (April-March). The targets are generally fixed by the banks about 20 to 25 per cent higher over the disbursements made in the previous year. With the introduction of SACP, the flow of credit to agricultural sector has increased significantly from Rs.8,255

5 crore in to Rs.1,22,443 crore in which were higher than the projection of Rs.1,18,160 crore. As against the target of Rs.1,52,133 crore for the financial year , disbursements to agriculture by public sector banks under the plan were Rs.1,11,543 crore (provisional). As recommended by the Advisory Committee on Flow of Credit to Agriculture and Related Activities from the Banking System (Chairman: Shri V.S. Vyas), the Mid-Term Review of Annual Policy of RBI for made the SACPmechanism applicable to private sector banks from the year Disbursements to agriculture by private sector banks under SACP during aggregated to Rs.44, 093 crore against the target of Rs.40,656 crore. As against the target of Rs.41,427 crore for the financial year , disbursements to agriculture by private sector banks aggregated to Rs.45,905 crore (provisional). From the Government side, with a view to doubling credit flow to agriculture within a period of three years and to provide some relief to farmers affected by natural calamities within the limits of financial prudence, the Union Finance Minister announced several measures on June 18, Accordingly, the Reserve Bank and NABARD issued necessary operational guidelines to banks. From the very beginning, the actual disbursements exceeded the targets for each of the last four years. As against the target of Rs.2,25,000 crore for , all banks disbursed Rs.2,25,348 crore (provisional). During , 7.29 million new farmers were financed by commercial banks and RRBs as against the target of 5 million farmers fixed by the Union Finance Minister for the year. The Finance Minister, in his Budget Speech for the year , urged the banks to increase the level of credit to Rs.2, 80,000 crore during the year

6 Such efforts have, however, not been transmitted to the growth in agriculture output. Since the mid-1990s, the growth of the agricultural sector has been low as well as volatile; the growth decelerated from an annual average of 4.7 per cent per annum during 1980s to 3.1 per cent during the 1990s and further to 2.2 per cent during the Tenth Plan period. Growth in agricultural production has decelerated during with the agriculture sector characterized by stagnation in output of major food grains. Per capita annual production of cereals declined from 192 kilogram (kg) during to 174 kg during and that of pulses from 15 kg to 12 kg over the same period. Per capita availability of food grains has, thus, fallen close to the levels prevailing during the 1970s.Volatility in agricultural production has not only affected overall growth but also exerted persistence pressure on maintaining low and stable inflation. Demand-supply gaps were reflected in higher domestic food prices in recent years. All these evidences apparently point to the fact that higher credit to agriculture is not translated into commensurate Increase in agricultural output. The study of the impact of agricultural cooperative credit on agricultural inputs, land improvement, production and marketing of different holding groups is important for the assessment of credit utilization. If the credit is utilized properly for the purpose for it was sanctioned, its impact that is, flow of benefits to the beneficiaries will help in improving their economic status. Food is a prime necessity of life, is an agricultural product and that the world is still so poor that it must devote a great part of its resources to the production of necessity. The utilization pattern of loans reflects that only

7 marginal farmers have shown the best results. Therefore, misuse of loans has been negligible in the case of marginal farmers and special schemes should be launched to further meet the financial needs of the marginal farmers. However, in terms of land improvement exceptions have been noticed in terms of larger farmers who make investments on land improvement. The coefficient of correlation between agricultural inputs and level of production reflects that there exists a perfect positive relationship between the two, but it is subject to marginal farmers only. The cooperative marketing societies are functioning under certain constraints which have hindered their growth. The main reasons are storage facilities and lack of local markets. However, of late, the government makes some efforts to locate the market in the local area, which further need to be disseminated to the clusters of two to three villages. Objectives: 1. To know about the Administrative Structure and role of Kachchh District Central Cooperative Bank. 2. To examine the socio-economic background of respondents. 3. To examine the impact of Kachchh District Central Cooperative Bank s loan on Farmers and evaluate it. 4. To examine the social change in Farmer s Socio-economic background due to District Central Cooperative Bank s loan. 5. To assess the problems in getting loan under District Central Cooperative Bank. 6. To suggest measures for improving of Agricultural Development Schemes.

8 Research Methodology: The methodological aspects of the study such as the selection of sample, villages, sources of data, tools of data collection and analysis are detailed here. Sampling: Descriptive research design has been selected in the present study. The district of Kachchh of Gujarat state was selected for the present study. 311 villages are there in Kachchh district. Among them 10 villages were selected from five talukas for the present study. Those villages are Bhajodi, Dhaneti, Dudhai, Kotada, Ludbai, Nirona, Khirai, Kedianagar, Bidada, Gadhshisa. From each village 50 respondents and total 500 respondents were selected for purposive sample method in the study. Only those respondents have been selected who have get the benefit of District Central Cooperative Bank. Since the total number of sample is not very large and it was possible to contact each of them. Sample of the Study Sr No District Taluka Village No of Respondents 1 Bhuj 1.Bhajodi 2.Dhaneti 50 2 Anjar 1.Dudhai 2.Kotada 50 3 Kachchh Nakhtrana 1.Ludbai 2.Nirona 50 4 Rapar 1.Thirai 2.Kedinagar 50 5 Mandvi 1.Bidada 2.Gadhsisa 50 6 Total (5) Total (10) Total (500)

9 Tools to be used in collection of data: This study was conducted as an empirical research. An empirical study of this type requires procedures that will reduce bias and increase reliability. An interview schedule was prepared in order to collect information from the respondents under the study. According to the supplementary technique observation method, in-depth interview and participation observation will also be arranged to collect the data. For secondary data published books, journals and reports have been reviewed. The collected data was edited, categorized, analyzed and tabulated and findings of the study were derived. Both quantitative and qualitative data were collected, which were done with different pre-set schedules. Method of Data Collection: The source of data for this includes both primary sources and secondary sources. The secondary sources include the reports of planning commission; Agricultural Development Reports, Thesis, etc were collected. An Interview Schedule was prepared in order to collect the primary data from the respondents under the study. The collected data was confirmed by holding informal interviews with responsible and knowledge local informants like Village Mukhi, key person of officers and leaders. The tools for used in collecting primary data are as given below. Interview Schedule: Schedule is the name usually applied to a set of questions which are asked and filled in by an interviewer in a face situation with another person. (Goode and Hatt: 1952:9)

10 Interview Schedule has been prepared in context of the purpose of the present study. In that Interview Schedule some questions conducted and those questions are primary information about respondents, family information, socio-economic condition related information about Impact of District Central Cooperative Bank on socio-economic conditions of Farmers etc. Interview Schedule had letter pretest by 10 % respondents under study and then finalized the interview schedule. And then the data has been collected though 500 respondents under the study by interview schedule. Observation: Observation is the process of getting information an object, person, situation or event through sense organs at the time when the phenomenon of the interest is occurring. (Poling Young 1973:161) Observation is not only one of the most pervasive activities of daily life; it is a primary tool of scientific inquiry. Observation becomes a scientific technique to the extent that if (1) serves a formulated research purpose, (2) is planned systematically, (3) is recorded systematically and related to more general propositions rather than being presented as a set of interesting curiosa, and (4) is subject to checks and controls on validity and reliability. In the present study data had been collected through observation method about respondent s different occasions, social life, lifestyle and daily activities. Participant Observation: In participant observation, observer joins in the daily life of the group or organization he is studying. He watches what happens to the members of the community and how they behave and he also engages in conversations with them to find out their reactions to, and interpretation of the events that have occurred. (Mozar and Kaltan). The comprehensive data had been collected

11 about a formal behavior of respondent s daily activities. Festival event, their personal interest in the gossip and occasions through participant observation method. Group Discussion Group discussion is one of the basic techniques it used as a combined effort, it becomes very useful. In it all the members participate equally. In small group this process becomes very useful. Generally group discussion centralizes on three kinds of questions or problems (1) Group work (2) Public Policy (3) Personal Behaviour. The present study is based on the Impact of District Central Cooperative Bank on socio-economic conditions of Farmers. So the group discussion had been arranged with people of the study area. In group discussion some experience based knowledge and data had been achieved about the daily situation of Farmers, their problems, limitations of the Cooperative Banks and aspects for the agricultural development. Variables: The following are the variables employed in this study Independent Variables All demographic, social, and economic attributes of sample respondents are treated as independent variables, (a) Demographic variables: (1) size of households and (2) Literacy level, (b) Social Variables: (1) proportion of nuclear and joint families, (2) Rural compositions in sample households; (c) Economic Variables: (1) type of house, (2) pattern of land ownership and income, (3) occupational structure, (4) income from wages, (5) income from other sources, (6) consumption pattern, (7) expenditure pattern, and (8) indebtedness.

12 Dependent Variables The impact of District Central Cooperative Bank on socio-economic conditions of Farmers is the dependent variables. By impact, we mean the positive changes in income, agriculture, housing and other aspects of the beneficiaries. Method of Analysis: The data related to the study were feed into a computer and verified in order to eliminate errors. One way and two-way tabular analysis with appropriate statistics like percentage, average, and co-relation were used in the analysis of data. Importance of the Study Social research gives scientific knowledge about the social facts. It scientifically investigates social life and gives scientific explanation of it. This knowledge becomes useful to construct the theory of social life and to solve the problems of practical life. In this context this research elaborates authentic data of the social-economic background of farmers and gives scientific insight. Through this, society will get the new knowledge about farmers and the present knowledge will increase. This study gives concrete fact about the background of District Central Cooperative Bank and, its impact on farmers and social change came in their life due to it. The conclusions of this present study also offers clues how those problems and challenges can be solved and how the modification can be made in the system to make District Central Cooperative Bank more applicable and fruitful.

13 Limitations: 1 The reason for not being able to cover more than five hundred respondents is the resource and time constraints of an individual. 2 It is not always possible to impact of District Central Cooperative Banks on the farmers as many others variables are also at play. There are multiple factors, which affect implementation. Only some factors are taken up for the study. Chapterisation: Present study divided into seven chapters which are given below. 1. RESEARCH METHODOLOGY 2. AN OVERVIEW OF COOPERATIVE BANKS IN INDIA 3. OUTLINE OF STUDY AREA 4. REVIEW OF LITERATURE 5. SOCIO-ECONOMIC BACKGROUND OF RESPONDENTS 6. IMPACT OF KACHCHH DISTRICT CENTRAL COOPERATIVE BANK S LOAN ON FARMERS 7. FINDINGS, CONCLUSIONS AND SUGGESTIONS Organization of the Study: The First Chapter describe the significance of the study, objective of the study, methodology, scope and limitation of the study and organization of the study. The Second Chapter compact with the consists of introduction to agricultural credit, significance of the Indian agriculture, importance of agricultural credit in India, agricultural credit in India-before independence, institutional credit

14 for agriculture and allied activities, committees estimation on agricultural credit, agricultural credit under five year plan period, The Third Chapter discuss the profile of study area. In this chapter explain the statistical profile of Gujarat and Kachchh District. It deals with socio economic profile of study area i.e. Kachchh district. It includes location, area and administrative division, population climate and rain fall sources of irrigation, irrigation facilities, area under principal crops and land holdings. The Fourth Chapter is devoted to review of literature. It has been categorized under two headings area. Studies related to Cooperative, Commercial Banks and Agricultural credit. Studies related to agricultural credit in India. The Fifth Chapter consists of analysis of on the socio-economic aspects towards development of small farmers, to identify the distribution of finance from institutional credit and non institutional credit in the study area. The Sixth Chapter The study shows the link between institutional credit and impact of Socio-economic development of small farmers in Kachchh district. The various tools have been used to measure the repayment performance, utilization of credit and the impact on socio-economic conditions of the farmers such as Total Loan, Annual Income, Crop Grown, Food Crops, Commercial Crop, Dry Land, Wet Land, Irrigation, Education, Assets Owned and its Impact on the Small farming community. Estimating the total credit requirements by realizing the importance of agricultural credit, several committees were constituted to evolve the modality of extending the credit facilities to the small farmers from time to time. The various attempts have been made to estimate the credit requirement of farmers in the study area. As

15 per recommendations made by the committees, the government of India has launched several ambitious programmes and its strategy to include growth. The Seventh Chapter deals with Summary, findings, suggestion, and conclusion the study. Appendix: 1. BIBLIOGRAPHY 2. INTERVIEW SCHEDULE