Abstract

Agriculture is the main economic sector providing the homestead, employment and income to the majority of the population in India. The main problem confronting such a vital sector is according to Leduc (1963), how to enable a peasant agricultural economy to finance the investments required for the desired development and to raise the working capital necessary for the annual crop cycle. Cited (Anon, 1904), by The Committee on Co-operation in Madras (1940) "One of the most difficult problems with which the small agriculturist is everywhere confronted is to obtain the money which is necessary for his operations at a reasonable rate of interest. The normal source of credit namely, the ordinary commercial banks, is closed to him partly owing to the nature and length of operations involved in agriculture and partly due to the unstable rate of yield on capital investments. The conditions of uncertanity, dilatory and unpunctual habit in the matter of repayments by farmers elc., have all contributed to the closure of general flow of credit from banks". The bulk of the agri- cultural credit has, therefore, been from money-lenders but at usurious rates. Painted in dark colours their behaviour has been greedy, unscrupulous and fradulent. Hence it becomes inevitable for the State to play an active role in the field of agricultural credit as an unselfish lender. In order to evaluate the benefits accruing to the farmers as a result of different kinds of financial aid provided by the Government for agriculture, an investigation was undertaken in the Coimbatore district. The data related to the problem of credit and role of different agencies supplying the credit. The present paper is based on the data relating to Southern parts of Coimbatore district.

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