THE INDIAN JOURNAL of AGRICULTURAL ECONOMICS Rhe
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THE INDIAN JOURNAL OF AGRICULTURAL ECONOMICS rhe (Organ of the Indian Society of Agricultural Economics) Vol. X MARCH 1955 No. I or of CONFERENCE NUMBER :tS, >(PROCEEDINGS of the FIFTEENTH CONFERENCE held at Allahabad, December 1954 SUBJECTS Statistical Concepts in Agricultural Economics. Population and Food Supply. 3. Role of Private Agencies in Agricultural Credit. 4. Economic Aspects of Land Development in New River Valley Projects. Rs. 6-8-0 CONTENTS PAGE OPENING REMARKS—PROF. H. S. AZ ARIAll . • • • • 1 • 3 Ar WELCOME ADDRESS—PROF. A. C. B ANERJI .. • • • • • • INAUGURAL ADDRESS—DR. PUNJABRAO S. DESIIMUKH • • • • • • 6 Th PRESIDENTIAL ADDRESS—PROF. D. R. GA DGIL • • • • • • • • 10 frC Statistical Concepts in Agricultural Economics (1) N. S. R. SASTRY •• •• •• •• • • 34 (2) P. K. MUKHERJEE • • • • •• •• •• 44 (3) V. G. PANSE •• •• •• •• .• •• 55 (4) S. THIRUMALAI • • • • •• •• •• 58 • • 69 DISCUSSIONS • • • • • • • • • • Population and Food Supply (1) V. M. JAKHADE . • • •• •• •• •• • • 76 (2) G. B. KULKARNI . •• •• •• •• •• 88 (3) P. N. DRIVER • • • • •• •• • • • • • • 97 (4) N. BHATTACHARYA. • • • • • • • • • • 104 2 (5) K. T. MERCHANT .. • • • • • • • • • • • • • • 107 Ti (6) K. S. SONACHALAM • • •• •• •• •• •• 114 (7) D. D. JENA •• •• • • • • • • 123 (8) M. B. NANJAPPA . • • • • • • • • • • 129 DISCUSSIONS .. • • • • • • • • • • • • 133 Ia Ci Role of Private Agencies in Agricultural Credit 13( (1) G. D. AGRAWAL • • • • • • • • • • • • 139 (2) M. B. DESAI • • . • • • • • • • • • 145 (3) S. G. MADIMAN • • • • • • • • • • • • 151 (4) M. SRINIVASAN • • • • • • • • • • • • • • 159 (5) I. G. PARTHASARATHY • • •• •• •• •• 169 (6) S. B. MAHABAL • • • • •• .• •• •• •• 175 (7) N. P. PATIL • • • • • • • • • • 178 DISCUSSIONS •• 181 • • • • •• •• •• •• Economic Aspects of Land Development in New River Valley Projects (1) SUDHIR SEN • • • • • • • • • • • • 187 (2) S. S. B. RAGHAVAN AND M. P. N. RAO • • • • • • 194 (3) M. SRINIVASAN .. • • • • • • • • • • • • 205 (4) G. V. N. REDDY • • • • • • • • • • • • 215 DISCUSSIONS • • • • • • • • • • • • • • • • 224 Appendices • • • • • • • • • • • • 236 PREFACE PAGE The current issue of the Journal contains the Proceedings of the 15th 1 3 Annual Conference of the Society held in December, 1954 at Allahabad. 6 The Conference was attended by nearly hundred members and delegates 10 from Central and State Governments, Universities and Research Institutions. The subjects chosen for discussion at this Conference were : 34 44 1. Statistical Concepts in Agricultural Economics. 55 58 2. Population and Food Supply. 69 3. Role of Private Agencies in Agricultural Credit. 4. Economic Aspects of Land Development in New River Valley Projects. 76 88 An unusually large number of papers were received and read on subjects 97 104 2 and 3, while on the other two subjects also there were select contributions 107 The 114 level of discussions was maintained at the usual high level. 123 129 The Allahabad Agricultural Institute could provide the Conference the 133 facility of a tape-recorder for recording the discussions. This arrangement has enabled us to incorporate the discussions in this Number. We hope, it will be possible for us to continue this feature in future. [39 [45 We take this opportunity of thanking the Allahabad Agricultural Institute [51 [59 under whose auspices the Conference met. We specially record our grateful . [69 thanks to Principal H. S. Azariah, Local Secretary of the Conference, who had 75 .78 inade excellent arrangements and to the Members of the Reception Committee 81 for their generous hospitality. tS 87 94 ,05 15 ,24 36 159 ?ROLE OF PRIVATE AGENCIES IN AGRICULTURAL CREDIT—RISE AND FALL ,./ D •\ M. Srinivasan Lecturer in Agricultural Economics Agricultural College, Coimbatore Agricultural credit is an important facet of the industry of agriculture but it is characterised by peculiarities and special features which distinguish it from credit for industry, trade or any other sector. Being a seasonal industry in which there is an inevitable time-lag between the investment and the outturn, credit is of the very essence of successful agriculture and suitable machinery for the provi- sion of credit to agriculture is the measure of its success as an industry. Indian agriculture is marked by certain peculiarities which add to the hazards of an al- • ready risky venture the world over. The fact has been repeated ar/ nauscam that Indian Agriculture is a gam ble in the monsoons with one good year followed by a bad and many indifferent years. Owing to inheritance laws and land hunger the small and uneconomic nature of holdings accentuate the risk element while the un- creditworthiness of the ryot—owing to low per capita income 2nd his being soaked in prior debt—furnish the coping stone to this edifice of danger. But the credit requirements are pressing and can be classified under the categories of cultivation expenses, expenses for maintenance of his family and prior interest obligations earmarked for former debts. Demandfor credit It has been estimated in the Monograph on "Rural Problems in Madras" that Rs. 30/- will be the cash requirement per acre for an irrigated crop, of course cash requirement is different from cost of cultivation but it can be taken as the basis for the purpose of estimating the credit required by the ryot. 12 million acres of irrigated crops in the Madras State will require Rs. 36/- crores. The total cropped area under dry crops is 25 million acres. Dry crops are seldom manured except with cattle manure which is available with the cultivator himself. There are no irrigation or water charges to be met. On the basis of Rs. 15/- per acre the total cash requirement for raising dry crops on 25 million acres amounts to Rs. 38/- crores making a total demand for credit of Rs. 74 crores for cultivation alone. The ryots who are rich do not require any credit and can manage under their own "steam". Many prudent cultivators require only partial help and the ranks of this category have been swollen by the prosperous state of agriculture engen- dered by the boom after 1942. It is only the small holders consituting over two- thirds of the cropped area owned— the marginal cultivators—who badly need credit. Hence ryots owning one-third of the cropped area in the State may not need any outside financial help leaving Rs. 50 crores to be financed by outside agencies. Maintenance of the family is a nebulous item depending as it does on the size of the h ouseh old, the standard of living of the family and the diet the members are accustomed to. Hence it has to be presumed that the previous harvest pro- . ceeds are available for this purpose, though they may not be enough and may just •tiufrIce to-Meet the land revenue-and the interest charges on previous debts. In 160 THE INDIAN JOURNAL OF AGRICULTURAL ECONOMICS other cases the holdings are too small to yield an adequate income which may have to be supplemented by subsidiary avocations or borrowing. In recent times agriculturists have not been doing badly owing to the favourable monsoons and only special occasions as marriage or death ceremonies would have necessitated recourse to borrowing. There were 5 million male agricultural labourers in the Madras State and 13 million other male agricultural classes as per the 1951 census report. It is assumed that the 5 million labourers have a deficit budget of Rs. 150/- of which roughly Rs. 50 may be made up by borrowing from outside sources giving a total of Rs. 25 crores. If 60% of the other agricultural classes are assumed to borrow Rs. 50/- a year for ceremonial expenditure and he like Rs. 40 crores will be borrowed from outside gi ing a grand total of Rs. 65-70 crores as the amount borrowed for family expenses. The third main item of expenditure is payment of interest on prior debts. Mr. W.R.S. Sathianathan estimated the amount of indebtedness among the ryots of Madras State at Rs. 200 crores in 1935. Owing to the favourable monsoons of the past two years and the buoyancy of agricultural prices some ryots have dis- charged their debts and the present indebtedness may be of the order of Rs. 100 crores, though this is only a guestimate. The interest charges and sinking fund allowances on this debt can be estimated at Rs. 10 crores per annum. Hence the total agricultural credit requirements of the Madras State may be estimated at Rs. 125-130 crores per annum. Though it is difficult to arrive at an exact figure in the absence of a statewide survey the order of magnitude involved furnishes a working basis on which to proceed. Supply of credit by private agencies: (a) Village moneylenders Unlike many countries of the West there has been no institutionalisation of credit for agriculture in India. "Laissez faire" in its literal sense has held the field for a long time without any attempt by the State at regulation of the agencies, their mode of working or price charged for their "wares". Nevertheless private agencies have played a great role in filling the gap between requirements and assets at the disposal of the ryots. The atomistic nature of Indian farming with its attendant and peculiar vagaries and hazards and the absence or unwillingness of institutional credit to embark on the uncharted seas of agricultural credit provide the raison d'etre of private agencies especially the moneylenders so much in evidence till lately on the rural scene. However much abuse may be hurled at their selfishness and usuriousness and, in spite of the derision and scorn in which "Shylocks" may be held by the Gentiles, it is beyond question that moneylenders have succoured the peasant from many an illwind for generations. "Nothing ventured, nothing gained" seem to be the motto of the village moneylenders and with their intimate connection with the cultivators and consequent knowledge and willingness to keep small accounts open with high overheads, ease of access and informality they were in a unique position to finance Indian agriculture. Mr. W.R.S. Sathianathan in his Report on Agricultural Indebtedness estimated that 93% of the credit requirements was met by moneylenders in the Madras State.