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application/pdfDifferential Access and the Rural Credit Market in Pakistan: SomeRecent EvidenceThroughout the remarkable growth of institutional rural creditin Pakistan there has been an underlying concern for its provision tothe small farmers and those unable to compete in the market for reasonsof inadequate collateral or repayment capacity. It is felt that theprovision of credit for production purposes would enable the smallfarmers to avail of the benefits of the seed-fertilizer revolution andequip them in time with the repayment capacity required to qualify forloans in the open market. With this end in view the governmentcontinued, and continues to, heavily subsidize the provision ofagricultural credit in Pakistan. According to official statistics, in1984-85 about 89 percent of the total credit disbursed in Pakistan bythe Federal Bank for Cooperatives went to the small farmers (thoseowning 12.5 acres or less); 70 percent of ADBP loan recipients and 90percent of commercial bank loan recipients owned less than 25 acres ofland [see Government of Pakistan (1985)]. However, a number ofindependent studies contradict these official figures [see for exampleNational Fertilizer Corporation (1984) and Punjab Economic ResearchInstitute (1986 and 1986a)]. This paper looks at the changing relativeimportance of institutional sources of credit in Pakistan and presentsevidence on the limited access of the small farm households to thesesubsidized sources of credit. Some evidence is also presented 011 thesignificantly higher rates of interest that borrowers have to pay onloans from non-institutional sources than they have to pay for similarloans from institutional sources for different purposes ofutilization.
Acrobat 5.0 Scan Plug-in for Windows; modified using iTextSharp 4.1.6 by 1T3XTWinter 1989,Vol. 28, No.4 Part II
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