Pattern of Investment vis-à-vis Credit Utilization in Dairy Sector of Punjab

This study was undertaken to assess the role of credit and investment pattern in dairy sector under Punjab conditions. It was found that on an average 28.9 per cent of per farm income comes from dairying in the state. For the state as a whole, Rs. 5,612/- farm were taken as loan for purchase of cattle and Rs. 9,641/- farm for construction of cattle shed. Out of total loan availed by sampled households in the state for investment purposes in agriculture between 2002–2007, it was just 2.2 per cent for cattle purchase and 3.7 per cent for construction of cattle shed. Utilization of credit is as important as credit availability to enhance productivity. Diversion of credit leads to indebtedness and depleting financial position of the farmers. The average investment on cattle in the state was found to be Rs. 9,175/- farm. Borrowed funds accounted for 61.2 percent of invested funds. The diversion of borrowed funds for this purpose is found to be 3.0 per cent. Thus actual share of loan amount utilized as investment on cattle was found to be 59.3 per cent investment on cattle On the other hand, Rs. 18,206/- farm were invested on cattle shed in the state. 53.0 per cent of this investment was accounted for by borrowed funds. In fact, the actual utilization of credit for total investment came to be 49.5 per cent as 7.0 per cent of the borrowed funds were found to be diverted for other purposes. Thus, development of dairying in state should be further encouraged in a big way through concessional credit along with subsidized cattle insurance, quality control on animal feed and systematic milk marketing etc.