Academic journal article South Asian Studies

Impact of Microcredit Scheme on Socio-Economic Status of Farmers (A Case Study of PRSP in District Gujranwala)

Academic journal article South Asian Studies

Impact of Microcredit Scheme on Socio-Economic Status of Farmers (A Case Study of PRSP in District Gujranwala)

Article excerpt


The living standard in low income developing countries always remains crucial issue to be addressed. In many developing countries, like Bangladesh, microfinance has been used as a tool to gear up the living standard of poor people (Akram & Hussain 2011).

Agricultural credit provides financial resources to the farming community particularly for the purchase of primary inputs like fertilizer, seeds, pesticides, machinery, equipment etc. The government considers it an important instrument for achieving higher production and attaches high priority to ensure its timely availability to the farmers. Credit requirements of the farming community have shown an increasing trend over in recent decade (Khan et al).

The roots of the Pakistan economic development depends mainly on agriculture sector rather than non-agriculture sector. Therefore, the Government should have a special focus on agricultural sector for the development of farmers and poverty alleviation in Pakistan. Growth in the agriculture sector will enhance the productivity which will lead to the betterment in the economic conditions of farmers, improvement in their children's education, health status and living standards. Farmers in the rural areas of the country need more facilitation than the farmers in urban areas. Therefore rural areas should be focused according to their requirement. Technology has increased the production of crops in agriculture sector in this modern era. In Pakistan, production of crops has not been increased due to lack of technology in the rural as well as in urban areas.

Microcredit plays an important role in agricultural development. One element of an effective strategy for poverty reduction is to promote the productive use of farm inputs. This can be done by creating opportunities for raising agricultural productivity among small and marginalized farmers. Microcredit is particularly relevant to increasing productivity of rural economy, especially agricultural productivity in such an environment where economic growth is occurring. Microcredit may enable small and marginalized farmers to purchase the inputs they need to increase their productivity, as well as financing a range of activities adding value to agricultural output (Nosiru & Omobolanle 2010).

Rural microcredit is intended primarily for investment in rural production activities to improve the well-being of the poor. However, its use to meet daily consumption needs is not prohibited. Nonetheless, credit increases income and consequently effects consumption. Punjab Rural Support Programme provides micro loans to the rural poor who have regular source of income (Seemi 2009).

PRSP has succeeded in creating an enabling economic environment in leading to a considerable increase in the income of the rural poor. PRSP aims to increase the income of farmers by helping them overcome the problems through total factor productivity. It also facilitates awareness building among the communities through information dissemination and organizing different activities such as field days and workshops in agriculture, livestock and poultry farming (Manzoor and Akhtar 2006).

Objectives of the Study

· To explore the role of microcredit in improving the socioeconomic status of farmers.

· To analyze the improvement in household living standard (household assets, clothes, infrastructure) of farmers due to microcredit.

· To see the improvement in quality of food available to the farmers due to microcredit.

· To assess the microcredit as reason to increase children's monthly educational expenditures.

Review of Literature

Bashir (2009) stated that the agriculture sector is the largest contributor to the national incomes (GDP) of the world economies as well as for in Pakistan, contributing nearly 21 percent to the GDP and provides employment to nearly 43 percent of the workforce and supplies raw material to the industrial sector (notably textile industry) of Pakistan. …

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