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The Rural Quagmire

Amaresh Bagchi

By Subrata Ghatak
Macmillan, New Delhi, 1976, vii plus 230, 58.00

VOLUME II NUMBER 1 January-February 1977

In economic matters judgements ba­sed on statistically tested hypotheses are surely to be preferred to hunches or guesses however clever. Where how­ever 'facts' derived through statistical analysis fly in the face of what is widely believed to be the reality, before procee­ding to accept them without reservations one has to take care to see that the data do not suffer from any infirmity that might vitiate the findings and that the inferences do not go beyond what is strictly warranted by the techniques employed. For statistical analysis, though useful as a check against snap judgements, has its limitations and in any case cannot help to quantify facts not fed into it. Ghatak does not seem to be inhibited by any such qualms while claiming origi­nality for fitting least square equations to rural credit data and drawing such conclusions as that interest rates in the Indian rural economy are not high or usurious—they range no higher than 15 or 17 per cent. No doubt the data which yielded these results were drawn from impecca­ble sources—All India Rural Credit Survey of 1951-1952 and All India Debt and Investment Survey of 1961-62. But did not the Rural Credit Review Commi­ttee strike a different note while review­ing the picture depicted by the Rural Credit Survey? To quote what that Committee said about interest rates— Of the total borrowings of cultivators from the private (and non-institu­tional) agencies of credit, borrowings at an annual rate of interest of 25 per cent or more formed as much as 70 per cent in Orissa, 49 per cent in Tripura, 40 percent in West Bengal and Himachal Pradesh, 29 per cent in Uttar Pradesh and 27 per cent in Bihar. Borrowings at interest rates of 50 per cent or above were also reported and constituted as high as 64 per cent of the total borrowings within districts selected for the survey in the old Madhya Bharat State and around 30 per cent in a few other selected districts. It was found that the amounts borrowed from the non-institutional agencies at rates in excess of those stipulated in the money lending enactments of the concerned states, amounted to over 80. per cent in Bihar, Madras, Orissa, West Bengal and Hyderabad and about 65 per cent in Madhya Pradesh and PEPSU.   Could the situation have changed so dramatically in the next ten years (the period of reference for the study) to warrant the conclusion ...

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