Some considerations in design of agricultural credit programs for Mysore State, India

The purpose of this study was to investigate the problem of agricultural credit in Mysore State, India, and to suggest major issues to consider in the design of agricultural credit programs for Mysore State. Only secondary data were used in this study. Data were derived primarily from the libraries of the University of Tennessee, the Library of Congress in Washington, D.C., publications of the Agency for International Development, discussions with Indian Agricultural students from Mysore State attending the University of Tennessee, and others with experience in India. The study consisted of five separate but interrelated objectives. The first objective was to determine the agricultural credit situation in India with emphasis on Mysore State. It was found that the money lenders are the primary source of agricultural credit, but that credit cooperatives have increased their loans tremendously during the past fifteen years. The second objective was to describe some characteristics of Mysore State that affect the success of credit proposals such as soils, climate, population, land area, and crops. These characteristics greatly determine the type of credit program that will be successful. The third objective was to present an illustrative example of a farmer in Mysore State who is interested in adopting new farming practices through the use of credit. This example was synthesized from data from several sources including several farm management studies from Mysore State. This example showed the kinds of problems a farmer is likely to encounter when he attempts to use credit productively. Credit problems were presented in the light of the social, political, and economic conditions within which they are likely to arise. The fourth objective was to examine conceptually some of the major issues, such as farmers' attitudes toward credit, loan security, land tenure, amount and timing of loans, and supervision of loans that are important in the design of credit programs. Most of these issues were drawn from the illustrative farm example, and here they were examined in a more conceptual manner. The fifth objective was to present some pertinent areas in which research into agricultural credit is needed. There appears to be a need for data showing the kinds of farm level capital that will be needed by subsistence farmers as they adopt new farming methods. Also, there is a need for theories that will enable credit planners to predict the probable response of a particular village or group of farmers to a certain program.