Saving and Investment pattern of Farm Households under Imperfect Rural Credit Markets

Dr. Poonam Singh

Assistant Professor, Dept. of Economics, SRS Girls PG College, Bareilly  UP

*Corresponding Author E-mail: poonam.kva@gmail.com

ABSTRACT:

Rural saving is always considered most important determinant of private investment in agriculture. Consequently agricultural economists in the country have shown for long considerable interest in the saving and investment behaviour of the Indian farmer. The study has particularly focused on the state of Uttar Pradesh which contributes a significant part of the agricultural output of the country. The main objective of the study is to explore the saving and investment pattern on different farm size groups in the state. The study concluded that there was a high degree of concentration of capital formation in the higher asset groups but the regional variations in investment in agriculture persist in eastern and western regions of Uttar Pradesh. Empirical evidences of sample household in Faizabad and Bijnor districts showed that, on average, a farm household saved 27.9 % and 33.7 % of its income in financial and physical assets in both districts respectively. Average savings in all type of savings increased with size of holdings in both districts. The purchase of livestock was the most important item of capital formation for marginal farmers to support their income. The preference to purchase agricultural implements and machinery in both districts was due to the adoption of new technology.

 

 

INTRODUCTION:

The household sector saving are a major component of domestic savings which provide the resources needed for capital formation. Saving is that part of the income, which is left unused after consumption and consists of both hoarded income and funds that are committed financially or used to purchase capital goods. Considering the rural saving as a major determinant of private investment in agriculture, agricultural economists in the country have shown for long considerable interest in the saving behaviour of the Indian farmer.

 

The study has particularly focused on the state of Uttar Pradesh which contributes a significant part of the agricultural output of the country. Even though the state is still predominantly agricultural, productivity levels in agriculture are relatively low and rural poverty is endemic. The state had witnessed fairly satisfactory agricultural growth in the post green revolution period, however, decelerated in the post-reform period. Uttar Pradesh, the most populous and considered one of the poorest states in India, has been a focal theme for discussion at various levels among economists.  

 

The main objectives of the study is to explore the regional variations in investment in agriculture in eastern and western regions of Uttar Pradesh and to depict the saving and investment pattern on different farm size groups.  This paper is divided into five sections. Section one describes introduction and conclusions of several studies, focused on regional development of the state of Uttar Pradesh. Study design and methodology has been discussed in second section. Third section explores saving behaviour of farm households in different forms of savings based on the data collected from sample households. Section four describes the various items of capital expenditure and section five summarized the findings of the paper.

 

REVIEW OF LITERATURE:

Several studies conducted on the economic development of Uttar Pradesh revealed the fact that the State economy is characterized by significant inter-regional variations in overall economic as well as agricultural development.  Eastern region of the State is particularly known for its poverty and backwardness, while Western region is regarded as one of the agriculturally more developed and prosperous regions of the country. Eastern region is less developed than Western region of the state in every dimension of economic development.^{9, 10, 11, 15}

 

A study by Srinath Singh highlighted that in Eastern U.P. agriculture was a very low paying business because holdings were small and scattered and prevailing technology made large scale investments in agriculture both risky and uneconomic¹².  Misra highlighted the uneven growth across regions in Uttar Pradesh and concluded that different regions have shown significant variations in productivity growth⁶ . Similar conclusions were drawn by Sen that the problem of variations in the agrarian conditions in different regions of the State existed even before Independence.  He concluded that while agricultural production has been increasing in Western U.P., Eastern U.P. was sunk in stagnation⁸. With a dense population, high pressure of population on agricultural land, and very low per capita income, the incidence of poverty in Eastern region is extremely high. U.P. still has a higher share of marginal land     holdings^{1, 14}.

 

This study is expected to make further contribution by throwing up fresh primary data on savings and investment behaviour of farmers and by looking at the regional picture of investment in agriculture in the state in the changed economic regime.

 

Research questions

The research problem was proceeded to counter the following main research questions:

·      How do farm households save their financial and physical assets in the study areas ?

·      What is the break- up of gross capital formation  of farm household?

 

 

STUDY DESIGN AND METHODOLOGY:

The primary data were collected from 256 selected rural households to study the saving and investment behaviour of farmers with the help of a field study. Data on various aspects of socio-economic conditions of the households, their income levels and saving and investment pattern were collected with the help of a detailed structured questionnaire. The questionnaires of the cultivating household were canvassed personally by researcher and the questions have been asked to cultivators about different aspects of their agricultural activities for the period of 1 July 2012 to 30 June 2013. The secondary information about blocks and villages was collected from district, block, and village officials.

 

A multi-stage random sampling design was used for the selection of households. In the first stage two districts, one each from the eastern and western regions of U.P. was selected. We have selected Bijnor district of west U.P. and Faizabad district of east U.P., as they represent the average situation prevailing in the two regions. In the second stage, two blocks were selected from each district, one with good irrigation facilities, and the other with poor irrigation facilities to take into account the variations in resource endowment. The percentage of irrigated area to the net sown area was the criteria of irrigation facilities. In the third stage, two villages were selected from each of the selected blocks, one with better infrastructure facilities in terms of roads and banks and the other with relatively poorer infrastructure facilities. In the final stage, 32 cultivating households were selected from each of the selected villages. Eight households were randomly selected in each village and from each category (according to the size of holding representing marginal (<1 hectare), small (1 to 2 hectares), medium (2 to 4 hectares) and large cultivators (>4 hectares).

 

FARM HOUSEHOLDS’ SAVING BEHAVIOUR:

The saving of an individual or a group can be measured by two methods, namely, direct and indirect. In the direct method, saving is estimated in a straight way at the end of a particular period. While in the indirect method, income and expenditure of the households are measured to estimate the saving. In this study, direct method has been followed to measure the saving of the farmers for accuracy⁴.

 

Forms of Saving

Different methods of saving by sample households are summerised in the following:

A. Financial forms--(1) Saving in cash; (2) Saving in deposits

B. Physical forms- (1) Saving in agricultural assets; (2) Saving in other physical assets

 

C. Saving in livestock.

Cash saving are relatively difficult to find out because most of the sample house holds were reluctant to inform about their cash savings. Saving in deposits is an often used form of saving but it more urban oriented and requires a certain level of literacy to be managed. Saving in agricultural assets is also practiced because of its higher flexibility. Some well-practiced forms include: (i) Stock of crops and (ii) Stock of seeds and fertilizer.

 

Saving in livestock represents the most practiced form particularly by marginal and medium farmers. It has a dual impact on the household economy, firstly, as a source of extra income and, secondly, by acting as cash which is always available at hand. Hoarding is that form of saving, which is not intended to be invested or liquidated in the early future. Gold and silver accumulation is an example of this form^{2, 5}.

 

Using an agricultural household model, farm household data were analyzed by several researchers in other developing countries using descriptive statistics and econometric models. Descriptive results showed that most of the sample farm households had savings in physical and financial assets, of which proportion of financial savings was higher⁴. To increase the saving (particularly financial), accessibility of rural people to the financial institutions plays a very important role. Imperfect rural financial markets negatively affect farm household saving behaviour. One of the reasons for this is the presumption that farmers in under developed countries are too poor to save, as they produce little marketable surplus³.

 

1. Financial Savings

Financial savings were rather low on marginal and small farms but substantial on the medium and large farms in both districts. The ratio of average savings of marginal and large farmers is 1:7 in Faizabad and 1:6 in Bijnor district. Among the spectrum of financial savings, payment of insurance had the largest shares in Faizabad and second largest in Bijnor districts. (Table 1)

 

 

Table 1: Financial Saving Per Farm in (Rs.)

Items			Faizabad					Bijnor
	Marginal	Small	Medium	Large	All Farms	Marginal	Small	Medium	Large	All Farms
National Saving cert.	438	375	4594	6344	2938	969	2625	4219	7188	3750
Kisan Vikas Patra	188	563	656	1188	648	156	469	1094	1563	820
Deposits in Post offices	234	444	875	1125	670	141	594	656	2219	902
Deposits in Banks	1031	2563	3969	7500	3766	1875	3563	6569	8000	5002
Shares / Debenture	0	0	0	938	234	0	0	0	0	0
Deposits in Financial Institution	0	75	281	425	195	0	0	94	188	70
Deposits in Provident Funds	1824	3052	3095	6636	3652	1411	2633	3056	5014	3029
Payment of Insurance	803	3481	5878	8933	4774	1016	4826	5945	9945	5433
Deposits in cooperative societies /Banks	100	166	288	253	202	149	300	375	534	340
Cash in Hands	309	694	1444	2734	1304	345	903	1153	1959	1090
Total Financial Assets	4927	11413	21080	36076	18383	6062	15913	23161	36610	20436

 

 

 

2. Saving in Physical Assets

According to Table 2 the amount invested in physical assets, including all household assets, in Faizabad districts was Rs. 7057 by past saving and Rs. 4734 by loans while in Bijnor this amount was almost half of the expenditure occurred by sample households in Faizabad district. The sum invested for purchasing of animals by saving was very low in Faizabad among marginal farmers and highest in the large farmers. In Bijnor medium farmers invested larger amount to purchase animals, whether by their own saving or by loan. Possess a good quality of animals are regarding as status symbol by farmers in Bijnor districts.

 

 

Table 2: Per Farm Expenditure of Sample Households in Physical Assets and Purchasing of Animals

Land Holding	Physical Assets through Own Saving	Physical Assets through Loan	Purchase of Animals by Own Saving	Purchase of Animals by loan	Total  Physical Assets
		Faizabad
Marginal	1421	688	813	2031	4953
Small	4218	1394	3091	2706	11409
Medium	8710	8888	4997	3659	26254
Large	13881	7969	5188	6000	33038
All Farms	7057	4734	3522	3599	18912
		Bijnor
Marginal	1647	378	3546	2903	8474
Small	3929	1809	4313	2313	12364
Medium	4866	2322	6688	10000	23876
Large	6355	4200	6500	3094	20149
All Farms	4199	2177	5262	4577	16215

 

 

Empirical Analysis

Empirical evidences of sample household in Faizabad and Bijnor districts showed that, on average, a farm household saved 27.9 % and 33.7 % of its income in financial and physical assets in both districts respectively. Average savings in all type of savings increased with size of holdings in both districts. Marginal farmers saved 68.8% of their total saving in financial form and 11.3% in livestock in Faizabad whereas in Bijnor they saved only 53% of their saving as financial savings (lowest % in all categories in both districts) and 31.5% in livestock. Large farmers in Bijnor district saved in financial forms (74%) as highest percentage of total savings in the all categories in both the districts. Saving in livestock was higher than saving in physical assets in Bijnor districts by all categories of farmers, which reflect the importance of animal husbandry as secondary business to support their income.

 

 

 

Table 3: Per Farm Saving of Sample Household in different Forms,( Rs.)

Category	Financial Savings	Saving in Physical Form	Saving in Livestock	Total
		Faizabad
Marginal	4927 (68.81)	1421 (19.84)	813 (11.35)	7161(100.00)
Small	11413 (60.96)	4218 (22.53)	3091 (16.51)	18722(100.00)
Medium	21080 (60.59)	8710 (25.04)	4997 ( 14.37)	34787 (100.00)
Large	36076 (65.42)	13881(25.17)	5188(9.41)	55145(100.00)
All Farms	18383(63.47)	7057(24.37)	3522(12.16)	28962(100.00)
		Bijnor
Marginal	6062(53.86)	1647(14.63)	3546(31.51)	11255(100.00)
Small	15913(65.88)	3929(16.27)	4313(17.85)	24155(100.00)
Medium	23161(66.72)	4866(14.02)	6688(19.26)	34715(100.00)
Large	36610(74.01)	6355(12.85)	6500(13.14)	49465(100.00)
All Farms	20436(68.35)	4199(14.05)	5262(17.60)	29897(100.00)

Note: Figure in parenthesis indicates percentage to total savings.

 

 

CAPITAL EXPENDITURE PATTERN OF SAMPLE HOUSEHOLDS:

An attempt has been made in this section to analyze the nature and extent of capital formation on different size of farms in Faizabad and Bijnor districts. Accordingly, the capital expenditure pattern of sample households in farm business, in non-farm business and expenditure on residential plots, buildings and durable assets as reported by sample households has been discussed.

 

1. Capital Expenditure in Farm Business

As it has been already stated that the items of capital formation included in this study are purchase of agricultural land, land improvement, means of Irrigation, purchase of livestock’s, purchase of agricultural implement and machinery, purchase of transport equipments, construction and repair of farm buildings, digging and repair wells and laying of orchards etc.⁷

 

Gross Capital Formation

The gross capital formation includes addition plus replacement of assets during a period. During the study period, large and medium farmers spent approximately 85% capital expenditure in farm business and rest was for small and marginal farmers. The comparison of expenditure by different groups of sample households in both districts reveals that out of the total expenditure marginal and small farmers accounted very small share. Average expenditure per farm in the case of marginal farmers was one-twelfth of that of large farmers in Faizabad and one-fifteenth in Bijnor. However, in relation to area under cultivation of these groups both small and large farmers spent nearly equal amount per hectare in both districts.

 

Break-up of Gross Capital Formation

Per farm capital expenditure in farm business by large and medium farmers was significant in both districts. Purchase of agricultural implements and machinery in Bijnor and purchase of agricultural land in Faizabad was the most important item of capital formation. The preference to purchase of agricultural implements and machinery in both districts was partly due to the adoption of new technology and partly because certain implements have to be replaced as, they wear out with the passage of time. Since they are essential for the performance of agricultural operations, investment on these items could not be postponed.

 

 

Table 4: Per Farm Capital Expenditure in Farm Business ( Rs.)

Items			Faizabad					Bijnor
	Marginal	Small	Medium	Large	All Farms	Marginal	Small	Medium	Large	All Farms
Purchase of	4688	7813	42969	46563	25508	0	11563	15000	90938	29375
Agricultural land	(38.18)	(21.21)	(40.64)	(31.86)	(33.90)	(0.0)	(25.44)	(13.35)	(43.13)	(30.72)
Land	72	1750	1659	4727	2052	200	778	2178	5606	2191
Improvements	(0.58)	(4.75)	(1.57)	(3.23)	(2.73)	(1.14)	(1.71)	(1.94)	(2.66)	(2.29)
Means of	853	2708	8072	9396	5257	1552	9200	10658	16552	9490
Irrigation	(6.95)	(7.35)	(7.63)	(6.43)	(6.98)	(11.19)	(20.24)	(9.49)	(7.58)	(9.92)
Agricultural Implements	606	3486	29431	35472	17249	1266	8297	56000	65844	32852
and Machinery	(4.94)	(9.46)	(27.84)	(24.27)	(22.92)	(9.13)	(18.25)	(49.84)	(31.23)	(34.35)
Repairs of Farm	0	0	563	2766	832	0	0	0	1094	273
Building	(0.0)	(0.0)	(0.53)	(1.89)	(1.11)	(0.0)	(0.0)	(0.0)	(0.52)	(0.29)
Transport Means	3188	15000	13875	31813	15969	4375	8953	11813	20375	11379
	(25.96)	(40.72)	(13.12)	(21.76)	(21.22)	(31.56)	(19.69)	(10.51)	(9.66)	(11.90)
Livestock	2844	5797	8656	11188	7121	6469	6625	16688	9594	9839
	(23.16)	(15.74)	(8.19)	(7.65)	(9.46)	(46.66)	(14.57)	(14.85)	(4.55)	(10.29)
Laying of orchards	28	284	498	4244	1264	3	44	25	853	231
	(0.23)	(0.77)	(0.47)	(2.90)	(1.68)	(0.02)	(0.10)	(0.02)	(0.04)	(0.24)
Total	12278	36837	105723	146166	75251	13864	45459	112361	210855	95635
	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)

Note: Figure in parenthesis indicates percentage to total .

 

 

 

Purchase of transport means is another important item of capital formation, especially in marginal and small size groups in both districts. This was due to purchase of new Dunlop carts by the cultivators to carry farm produce, especially sugarcane to the sugar mills in Bijnor district. However, marginal and small farmers in Faizabad districts preferred purchasing of motorcycles as a means of transport. The marginal farmers and small farmers in Faizabad have spent 25 % and 40% respectively of their total capital expenditure on purchase of transport means, which are used for carrying articles etc. for sale in urban centers and for other purposes. The other important item of capital formation was purchase of livestock mostly by marginal and small farmers in both districts and medium cultivators in Bijnor district. The main reason of heavy investment on this item was that most of the farmers maintain a few milk animals as this has become quite paying, particularly in Bijnor district.

 

About one-fourth of capital expenditure in Faizabad and nearly half amount of capital expenditure in Bijnor by the marginal farmers were reported on purchase of livestock. This indicates that the purchase of livestock was the most important item of capital formation for marginal farmers to support their income.    More than 20 percent of the capital expenditure has been made on irrigation appliances by small farmers in Bijnor district with a view to provide secured irrigation for crops specially sugarcane and paddy which occupy a high proportion of the cropped area and require more irrigation than other crops. Low investment in case of orchards, could be explained that marginal and small farmers have limited area, hence they cannot afford to put much area under orchards, and the cultivation of land provides employment to the family members.  Contrary to this, crop production in the large size-groups was faced with the scarcity of labour and problem of management to cultivate all the land properly. Therefore, they were ready to put some area under orchards, which requires less labour and provide return for a number of years.

 

2. Capital Expenditure in Non-Farm Business

Expenditure incurred on non-farm business relates to those activities of manufacture, such as industry, mining and quarrying, trade, transport, miscellaneous profession and services. All expenditure undertaken by sample households in these capital items would comprise capital expenditure in non-farm business⁷.

 

 

Table 5: Per Farm Capital Expenditure in Non-Farm Business in Rs.

Land Holding	Land and Buildings	Equipments and Machinery	Transport Equipments	Furniture and Fixtures	Other	Total
			Faizabad
Marginal	4375 (54.77)	2156 (26.99)	1094(13.70)	34(0.43)	328  (4.11)	7988(100.00)
Small	6250(85.46)	1000(13.67)	0(0.0)	63(0.86)	0(0.0)	7313(100.00)
Medium	4688(18.52)	19375(76.54)	1250(4.94)	0(0.0)	0(0.0)	25313(100.00)
Large	18438(46.75)	16563(41.99)	4063(10.30)	375(0.95)	0(0.0)	39438(100.00)
All Farms	8438(42.16)	9773(48.83)	1602(8.01)	118(0.59)	82(0.41)	20013(100.00)
			Bijnor
Marginal	6125(55.70)	3177(28.89)	1225(11.14)	156(1.42)	313(2.85)	10996(100.00)
Small	5429(49.90)	4200(38.60)	1004(9.23)	169(1.55)	78(0.72)	10880(100.00)
Medium	15672(28.02)	16559(29.61)	15443(27.61)	7691(13.75)	558(1.00)	55923(100.00)
Large	21098(29.32)	12334(17.14)	35442(49.25)	2763(3.84)	332(0.46)	71969(100.00)
All Farms	12081(37.27)	9068(24.22)	13279(35.46)	2695(7.20)	320(0.86)	37442(100.00)

Note: Figure in parenthesis indicates percentage to total

 

 

Marginal and small farmers in both districts respectively incurred small percentage total capital expenditure in non-farm business. The medium and large farmers invested about 5.8 times in Bijnor and 4.2 times in Faizabad than marginal and small farmers. The farmers of all size groups in Faizabad invested more in land and buildings with productive equipment and machinery, while in Bijnor, medium and large farmers gave high priority to transport equipments with land, buildings equipments and machinery related to non-farm business reflecting the more affluent status of farmers of western Uttar Pradesh. The largest item of capital expenditure in non-farm business in Faizabad was production equipment and accessories followed by land and building while; in Bijnor it was land and building, followed by transport equipment and production equipment accessories.

 

3. Housing and Household Expenditure

Capital expenditure on housing and durable household assets include purchase of residential plots, houses, buildings and durable household assets, such as bullion, utensils, radios, etc. Types of expenditure would be covered towards new purchases of plot or building, and the expenditure incurred in the alternations or repairs. The items, which could normally be termed as durable assets are television, refrigerators, radios, mobile, washing machine, almirahs, furniture and fixtures, household utensils ornaments, etc. Large and medium farmers were more interested in purchase of new residential plots and buildings in both districts.

 

 

Table 6: Per Farm Capital Expenditure in Housing and Purchase of Durable Households Goods (Rs)

Items	Marginal	Small	Medium	Large	All Farms	Marginal	Small	Medium	Large	All Farms
			Faizabad					Bijnor
Construction of new building	313	10563	17375	1875	7531	0	9375	2500	6344	4555
Purchase of land	4250	3563	17500	62813	22031	8375	5000	17031	20313	12680
Repairing of  houses	2719	3413	7047	14281	6865	2125	3563	5875	7125	4672
Total-Housing ex.	7281	17538	41922	78969	36427	10500	17938	25406	33781	21906
Television	406	972	1406	2172	1239	1016	3016	3469	4813	3078
Refrigerator	209	250	703	1094	566	219	288	484	250	310
Washing machine	0	0	281	500	195	0	0	375	469	211
Gas stove	703	753	428	219	526	672	1078	728	694	793
Radio/tape record	0	63	478	688	307	141	31	388	0	140
Utensils	31	109	63	313	129	16	100	169	159	115
Furniture	403	850	1047	1569	967	169	266	469	906	452
Bullionand ornaments	844	1281	5769	16125	6005	406	3344	7500	6438	4422
Watches	72	31	100	109	78	47	63	25	141	69
Other durable goods	34	156	1172	469	458	66	112	236	481	224
Total ex. on durables	2703	4466	11447	23256	10470	2766	8296	13842	14350	9813

       

Marginal and small farmers also invested significant amount in construction of new building, which were not productive enough to raise the incomes and living standards of those households. The capital expenditure per household was higher in respect of new purchase of buildings and residential plots than that of construction of new buildings and repairing of old houses in both districts. It shows the higher priority accorded by the rural households to residential plots.  Capital expenditure per household was highest for new construction by medium farmers in Faizabad and by small farmers in Bijnor districts, where new purchase of residential plots and buildings accounted for highest average capital expenditure by large farmers in both districts. However, per farm capital expenditure incurred in purchase of durable households goods was highest by large farmers in both districts, a substantial amount was also invested by marginal and small farmers. Bullion, ornaments, television with mobile phone, furniture and wooden goods were the most popular items for capital expenditure by all farm size groups in both the districts.

 

Estimates of Total Capital Formation

Total capital expenditure on all activities by the sample households reveals that 53% and 58% of the capital formation was under the head of farm business. There was a high degree of concentration of capital formation in the higher asset groups in all the three individual activities.  Expenditure on farm business assumed greater importance in terms of the average capital expenditure by all categories of sample households in both districts. All categories of the farmers in Faizabad were much interested in residential plots and durable household assets as they invested 33% of their total capital expenditure on this head. (Table 7)

 

 

 

Table7: Per Farm Total Capital Expenditure by Sample Households  (Rs.)

Land Holding	Farm Business	Non-Farm Business	Residential Plots, Buildings and Durable Household Assets	Total Capital Expenditure
		Faizabad
All Farms	75251(52.93)	20013(14.08)	46897(32.99)	142161(100.00)
		Bijnor
All Farms	95635(58.03)	37442(22.72)	31719(19.25)	164796(100.00)

Note: Figure in parenthesis indicates percentage to total capital expenditure.

 

Table-8 Percentage Share of Total Capital Expenditure in Different Farms

Land Holding	Farm Business	Non-Farm Business	Residential Plots, Buildings and Durable Household Assets	Total Capital Expenditure
		Faizabad
Marginal	4.08	9.98	5.33	5.32
Small	12.24	9.14	11.73	11.63
Medium	35.12	31.62	28.45	32.43
Large	48.56	49.27	54.49	50.62
All Farms	100.00	100.00	100.00	100.00
		Bijnor
Marginal	3.62	7.34	10.46	5.78
Small	11.88	7.26	20.68	12.53
Medium	29.37	37.34	30.93	31.48
Large	55.12	48.05	37.93	50.21
All Farms	100.00	100.00	100.00	100.00

 

 

The comparison of expenditure by different groups of cultivator households reveals that expenditure of the two lower strata of cultivators was about on fifth of that incurred by large farmers. It is clearly indicated that capital expenditure in farm business was quite high in large farmers in Bijnor district but by other three categories was substantially higher in Faizabad than Bijnor districts. However, total amount and percentage share of total capital expenditure by all size farms was larger in Bijnor than Faizabad district that point out higher investment in the western region of Uttar Pradesh in farm business.

 

CONCLUSION:

The study has estimated current saving in the form of financial and physical assets. Financial saving was not large on marginal and small farms but was substantial on the medium and large farms in both districts. Marginal farmers in both districts are able to save very nominal amount.  Almost all sample households in both districts used about one-fourth of their savings as a payment of insurance. Deposits in the commercial banks, in the provident funds and purchasing National Saving Certificates were the next important items of saving. Medium and large category of sample households in Faizabad, spend a large amount on non-productive goods. Purchasing of animals by saving was low in Faizabad. Medium farmers in Bijnor invested larger amount to purchase animals because number of good quality animals are supposed to be status symbol in this districts.

 

Per farm capital formation increased with increase in size of holdings in both the districts. Gross fixed capital formation in Bijnor district for all categories of farmers was much higher than in Faizabad district. The preference to purchase agricultural implements and machinery in both districts was due to the adoption of new technology. Purchase of transport means is another important item of capital formation, especially in marginal and small size groups in both districts to carry farm produce, especially sugarcane to the sugar mills in Bijnor district. Marginal and small farmers in Faizabad districts preferred purchasing of motorcycles as a transport mean maybe due to changing way of life and their use for business purposes.

 

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Received on 02.03.2016       Modified on 06.04.2016

Accepted on 20.05.2016      © A&V Publication all right reserved