Category-wise magnitude and determinants of indebtedness among farm households in rural Punjab

The present study examined the magnitude and determinants of indebtedness among farm households in the rural areas of Punjab. For this purpose, the primary data were collected from 510 farm households during the period of 2015-16. The results of the study reveal that as many as 88.24 per cent of the total farm households were under debt. The amount of debt per average and indebted farm household was relatively higher among the semi-medium, medium, and large farm-size categories as compared to the marginal and small farm-size categories. The average amount of debt per owned acre was inversely related with the farm size. There was a positive relationship between the proportionate share of debt from the institutional sources and the farm size. Commercial banks are the most important source of debt. All the farm-size categories have incurred the maximum debt for purchasing farm inputs, machinery and implements; and category-wise average amount and relative share of debt incurred for this purpose was positively related with the farm size. The marginal, small, semi-medium, and medium farm-size categories have incurred the maximum amount of debt at the high rate of interest as compared to the large farm-size category.