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Relationship between asset formation and indebtedness among Punjab farmers

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Simpy, V.K. Sharma, Varinder Pal Singh and H. S. Kingra

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Abstract

Indian Journal of Economics and Development
Year : 2012, Volume : 8, Issue : 1
First page : ( 37) Last page : ( 48)
Print ISSN : 2277-5412.

Relationship between asset formation and indebtedness among Punjab farmers

Simpy*, Sharma V.K.*, Singh Varinder Pal**, Kingra H. S.*
*Department of Economics and Sociology, Punjab Agricultural University, Ludhiana

**College of Dairy Science and Technology, GADVASU, Ludhiana-141004

Abstract
The study was conducted in Ludhiana district of Punjab state to examine the various aspects related with the asset formation and indebtedness and their relationship among the farmers. The results of the study brought out that the assets formation on the per hectare basis was to the tune of ‘110228 and it was the highest among the marginal farmers (‘145765) and lowest among the large farmers (‘102169). The income from crops was found to be higher among large farmers (67.02 per cent) and lowest on marginal farmers (27.24 per cent). Further, the share of dairy income was highest among marginal farmers with 70.07 per cent and lowest among the large farmers (31.28 per cent). On per hectare basis, the total requirment of funds for assets creation was higher among marginal farmers (‘145764) and the lowest among the large farmers (‘102169). The share of owned funds and repayment capacity was found to be the lowest among marginal farmers due to their small land holdings and hence lower farm income level. The proportion of borrowed funds and outsandings was the highest among marginal farmers and lowest among large farmers. The relation between long term credit and assets formation was found to have positive and significant. As the long term credit increased, assets formation also increased. The credit and assets formation found to be highly correlated among all the categories. The results revealed that institutional credit was highly correlated with the assets value. The share of non-institutional credit and farm size had as inverse relation.