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Agriculture and Food Security - Agriculture Growth in AP - completed |
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Flow of Funds Between Rural and Urban
Areas : A Case Study of Andhra Pradesh Agriculture |
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| Project Director |
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K.S.Reddy |
| Sponsored
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NABARD |
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Flow of funds accounts (real flows and financial flows) basically describes changes in the financial activity of the economy. Real flows may be analysed through input output relations, demand relations, savings and investment relations and labour flows. The extent of input output linkages depends on the nature of technology used and the development of agricultural and industrial sectors. Flow of financial resources was analysed through savings and investment of different sectors. |
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The broad objectives of the study were to examine and elucidate: a) the dependence of agricultural sector on rural and urban sectors, b) Consumption behaviour of rural households for agricultural and industrial goods, c) Forms of savings by rural households and their pattern of investment, d) credit linkages and linking post office network with banking system for deposit mobilization of savings and credit delivery e) the extent of agricultural surpluses (actually marketed) and determinates and suggesting ways and means to plough back rural household savings
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| Methodology |
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Three districts viz., Nellore, Anantapur and Nalgonda were selected for study based on the agricultural input output indices. One mandal from each revenue division of the selected district, and one village from that mandal were selected randomly. Farmers were categorized as marginal, small, semi-medium, medium and large farmers, according to farm size. From each category, eight farmers were selected, giving a sample size of 360 respondents with 120 respondents from each district.
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| Findings |
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Proportions of costs in total value of output of all crops from rural origin were high in Nalgonda (47%) followed by Anantapur (45%) and Nellore (41%). Rural urban cost shares declined as farm size increased except that the rural costs declined more steeply than urban cost shares across the classes for all crops. The rural cost shares are high for paddy, groundnut and cotton in the all three districts. |
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Expenditure on non-food items also increased with increase in farm size. This was also reflected by the expenditure elasticities of food and non-food expenditures. |
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Farmers savings were mostly in the form of stocks and goods, followed by savings with banks & cooperatives informal institutions. However, 20 to 33 percent of the investment in all assets is of urban origin involving motors and machinery and equipment. Considerable investment is also made on wells, which is of rural origin. |
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There was a considerable decrease (from 21.5 percent in 1990 to 12.9 percent in 1999) in Scheduled Commercial Banks
(SCBs) credit to rural areas. Proportion of credit given to agricultural sector declinined from 14.95 percent (1990) to 9.92 percent (1999) at all India level were observed. |
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About 80 percent of formal small savings (post office savings) are given to the state governments. Unless this is changed one cannot establish links between post office branches and commercial banks for deposit mobilization and credit delivery. Mortgaging of postal savings was observed in Nellore with high rates of interest (18 to 20 percent), compared to the interest rates of informal credit sources. |
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Output produced constituted an important factor affecting marketed surplus of individual crops. The factors affecting marketed surplus of all crops were output produced, current loans and income consumption and their components. |
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Increasing credit limit, reduction in the interest rate, watershed
programme, reduction in the electricity tariff rate, infrastructure development were some of the policy suggestions
offered |
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