Non-institutional loans among tenants of Rajasthan and Haryana

Abstract

Agricultural credit is vital for the growth of India’s farming sector, but tenant farmers face significant challenges in access of formal credit due to limited collateral and savings, often relying on high-interest non-institutional loans. This dependence induces financial instability, debt accumulation, and vulnerability to economic shocks. The study focused on Haryana and Rajasthan, selected districts and blocks based on agro-climatic zones. Data from 320 tenant farmers were collected through structured interviews to explore debt levels and repayment patterns. Results revealed that non-institutional loans were prevalent among tenants, with 75% relying on them. Short-term loans were the most common (71.07%), and irregular repayment behaviour was widespread (64.88%). The rate of interest on loans was significantly associated with socio-economic factors such as age, education, caste, and income levels. The findings accentuates the need to expand formal credit access and improve repayment structures to alleviate tenant farmers' financial distress and reduce reliance on high-interest informal loans, fostering agricultural sustainability.