THE ECONOMIC WEEKLY SPECIAL NUMBER JUNE 1960

In the nine 'years since the Rural Credit Survey was launched, the practical recommendations of the Committee of Direction have been first enthusiastically adopted and then suddenly shunted aside by the Gov-ernment of India.

Policy apart, the Report of the Survey may be considered in its own right as a scientific document. An assessment at this date may be of timely interest as the Reserve Bank is planning another survey of equally vast dimensions. For its part, the Government of India in New Delhi is considering the appointment of an All-India Commission on Agriculture. Rural credit may well be included in the Commission's terms of reference.

During the past eight years, the author of this critique has been studying land reforms, agricultural labour, agrarian regions and rural credit. In 1958-59, he made a 10,000 mite tour by road of India, visiting more than 100 co-operatives of various types.

Together with Mrs Alice Thorner, Dr Thomer has published in this and other journals a number of articles on Indian economic and statistical subjects which are to be issued in collected form by the Asia Pub­lishing House of Bombay under the title, Land and Labour in India: Selected Studies.

Dr Thomer is taking up an appointment in Paris for 1960-61 as Associate Professor in the Ecolc Pratique des Hautes Etudes, at the Sorbonne.

THE Reserve Bank of Ind ia an­nounced in August 1951 i ts de­

cision to sponsor a country-wide Sur­vey in order to ob ta in a factua l ba­sis f o r the fo rmat ion of long-term pol icy in the sphere of rura l credi t . Not surpr is ing ly , problems of agr i ­cul tural f inance and v i l lage debt had provided the topics for a long series of earl ier governmental enquir ies. One impor tant feature dist inguished the proposed Rura l Credit Survey f r om its predecessors. These had re­l ied p r i m a r i l y on the t ime-honoured method o f i nv i t i ng "ev idence" f r o m persons deemed to he par t icu lar ly knowledgeable. The, Reserve Bank, by contrast, called for the direct col lect ion of fresh f ield data.

To design and conduct this Sur­vey, to in terpret its results and to

make recommendations, the Bank appointed an expert Committee of D i rect ion. A l though small — its membership consisted of three h igh-rank ing Reserve Bank officers and two non-officials — the Committee included men of wide experience, in v i l lage surveys, agr icu l tu ra l credit operations, and general administra­t ion . The Reserve Bank instructed the Committee to car ry out a Survey which would "adequately cover dif­ferent strata of the agr icu l tura l po­pulat ion in representative parts of the country w i th reference to their credit needs and to the agencies, ex­ist ing or needed,, f o r f u l f i l l i ng those requirements." The Committee were also asked to look in to other aspects of r u ra l l i f e , "such as the pat tern

of savings and deficits in the agr i ­cu l tu ra l economy, the trends, i f any, toward shifts in income, and the problem o f capi ta l f o rmat ion in ru ­ra l areas." (Survey Report, Vo l I, Part 2, p 704.)

Ac t ing p rompt ly , the Committee of Di rect ion organized an elaborate programme of f ie ld investigations which were carr ied out over the year 1951-52 in 600 vi l lages located in 75 of India's 302 administrat ive dis­tr icts. In A p r i l 1952. when well more than half of their f ield survey was over, the Committee reported opt imist ica l ly to the Reserve Bank that the qua l i t y of the data collected was on the whole, satisfactory. They ant ic ipated that their report would be completed in October of the same

The A l l - I nd ia R u r a l Credi t Survey, as f inal ly issued in Bombay by the Reserve Bank over the signatures of

the Committee of D i rect ion, consists of three volumes.

Volume I is cal led the Survey Report and is in two parte:

Part I (Rural Families) and Part 2 (Credit Agencies), dated respectively 1956 and 1957.

Volume II is called the General Report and contains the Committee's recommendations; it is dated

Bombay, 1954.

Volume HI i« called the Technical Report and is dated Bombay, 1956. Pract ical ly all of this th i rd volume consists of tables of data (900-odd pages), blank schedules, and summaries of the instruct ions o r i g i -nally issued to the staff f o r fil l ing up the schedules. Hence the volume might better have been called Data or "Tables" Proper ly speaking, we are stil l without a technical report on the Rural Credit Survey.

A h igh ly condensed version of Vo lume I, The Survey Report, was issued by the Reserve Bank in 1955. It is ent i t led. All India Rural Credit Survey. Vo lume I, The Survey Report: Summary.

There are two official condensations of Vo lume II, The General Report. One is a brochure in 64 pp entit led Vo lume H, The General Report: Summary; the other is a crown octavo book of 300 pp ent i t led, The General Report: Abridged Version. Both of these were publ ished by the Reserve Bank in 1955.

949

The Al l - India Rural Credit Survey

V i e w e d as a S c i e n t i f i c E n q u i r y Daniel Thorner

SPECIAL NUMBER JUNE 1960 T H E E C O N O M I C W E E K L Y

year. Th i s was, of course, much too sanguine. In the middle of De­cember, 1952, the Committee of Di rec t ion had to advise the Reserve Bank that the work had tu rned out to be much more than ant ic ipated. Efforts were being made to expedite matters, and it was hoped to have the A l l - I n d i a report ready in a few months ' t ime. Progress was reported in, the prepara t ion of regional and A l l Ind ia tables.

By August, 1954, three years after the Survey was launched, the Com­mittee was ready w i t h its recom­mendations. The 580-page General Report embodying these p o l i c y pro­posals referred only casually to the results of the field work . A b r i e f resume of the Survey's findings, however, appeared a few months later in a separate 150-page Summary w i t h an 8-page statistical appendix. Another two years elapsed before the publ ica t ion — in the Survey Report and the Technical Report, to­gether conta ining 1000 pages of tables and 1800 of text — of the author i ta t ive version of the Survey data and the Committee's analysis thereof.

By the t ime that the field results were made available in this f o r m , their significance had come to be a matter of academic interest. The Government of Ind i a and the Re­serve Bank had already accepted and taken major steps to implement the 1954 recommendations of the Committee of D i r ec t ion . Since only a h i g h l y condensed discussion of the findings had been pr in ted , neither the actual figures nor the methods by w h i c h they had been obtained cou ld be evaluated object ively. None­theless, the great quant i ty of mate­rials known To have beeen amassed and presumed to have been taken into account lent unusual weight to the Committee's conclusions. Fur­ther, the Rura l Credit Survey (RCS) enjoyed the prestige of hav ing been conducted under the auspices of India ' s premier f inancia l i n s t i tu t ion . W i t h this impressive backing, the Committee's proposals- neatly carr ied the day. Before the heavy tome? of the Report could be pr in ted , let alone read, studied, or discussed, the programme of action was under way. Bi l l s were speedily introduced and passed, the highest bank in Ind ia was nationalized, a govern­mental warehousing corpora t ion was created at the Centre, and a phas­ed' plan to cover the r u r a l areas w i t h

a network of new-style large-sized co-operative societies was under­taken by the States.

Al though the data collected by the Rura l Credi t Survey (RCS) cou ld not readi ly be d r a w n upon at the time when action was being taken on the Committee 's recom­mendations, these materials have subsequently come to be cited in a wide variety of contexts. Internat ion­al agencies have evinced interest in using the RCS as a model fo r i n ­vestigations of agr icu l tu ra l credit problems in other countries. A pro­posal to repeat the survey on a grand scale in I n d i a is current ly re­ceiving consideration. Accord ingly , it w i l l not be out of place to attempt an assessment of the RCS as a scien­t if ic enqu i ry leaving aside the ques­t i on of its influence on po l i cy .

Dimensions of the Enquiry The decision to undertake such

an enquiry , i t w i l l be recalled, was made in August, 1951. By the end of October, 1951, the investigators had started on their way to the 600 villages selected for survey. These f ie ld workers carr ied w i t h them seven schedules and five question­naires. The most impor tan t of these schedules was ent i t led, 'De­mand Schedule N o . 1 : General ." I t was the basic document of the Sur­vey, and is usually referred to brief­ly as the general schedule. It con­tains roughly 100 questions to be put to al l families in the 600 villages, that is a grand total of 127,000 fami­lies. Topics for w h i c h data were to be collected on this general sche­dule inc luded: specified types of capital expenditure in agr icu l tura l and non-farm business, f ami ly ex­penditures and other miscellaneous expenditure, sales of assets, borrow­ings, repayments of loans, outstand­i n g indebtedness, and outstanding dues.

The other six schedules and the five questionnaires contained five hundred questions wh ich were to be filled up at least once each for 15 sample families in each of the 600 villages, that is. fo r a much smaller sample of 9000 famil ies . As against the data on 127,000 famil ies obtain­ed by the general schedule, the data secured f r o m the 9000 families are termed in the survey, the "Intensive E n q u i r y data." In part , these " i n ­tensive" schedules traversed in greater detai l the same ground as the general schedule; in part , how-

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ever, they asked a wide var ie ty of new questions.

I t is w o r t h pausing a moment to consider the impl ica t ions of the pace at w h i c h the RCS was conduct­ed. In less than three months ( i .e . , f r o m August to October 1951) the nature of the enqu i ry was decided u p o n ; a multi-stage sampl ing design prepared; 600-odd questions f ram­ed, translated in to a ha l f a dozen languages and p r i n t e d ; and a staff of investigators and inspectors re­crui ted, t ra ined, and sent in to the f ie ld . No p i l o t enqu i ry was con­ducted to see how the new schedules w o u l d w o r k out. No t r i a l tabulations were made to see whether the sche­dules would y ie ld the requisite data in suitable f o r m .

W O R K - L O A D O F F I E L D S T A F F

The schedules and questionnaires to w h i c h we have referred above constitute on ly the "demand" forms. In addi t ion , there was an equal number of " s u p p l y " forms, that is. seven " s u p p l y " schedules and five " s u p p l y " questionnaires. These were got ready after the f inal is ing of the "demand" forms and sent out to the 225 investigators and inspectors. A l l the " s u p p l y " and "demand" forms were to be completed by the middle o f 1952.

The field staff were also instruct­ed to collect comprehensive back­g round data on the districts in which they were w o r k i n g . Topics on which d i s t r i c t i n f o r m a t i o n was to be gather­ed inc luded: r a i n f a l l , climate, water supply and i r r i g a t i o n ; crop pat tern, pa r t i cu la r ly for commercial and garden crops; processing plants, i n ­dustry in general and m i g r a t i o n ; t ransport arrangements, costs and ne twork ; market ing centres and value of total transactions. A de­tailed l i s t ing of a l l types of banks was to be made and a dis t r ic t map prepared on w h i c h the above data were to be indicated. Above and beyond all this, the field staff were to sketch the structure of supp ly of r u r a l credit by al l agencies and an­alyse their in ter re la t ions ; character­ize the l i q u i d i t y of credit , the work­ing of co-operatives, the f inancing of market ing , the relations of land­lords, tenants, and cropsharers, the w o r k i n g of the debt re l ief laws, and the extent of evasion of legislation for the control of moneylenders.

Supervis ion, l ike t r a in ing , appears to have been sk impy. To ensure u n i ­f o r m understanding and implement-

T H E E C O N O M I C W E E K L Y SPECIAL NUMBER JUNE 1960

at ion of instructions there has to be frequent contact between the higher officers and the men in the f ie ld . In the RCS, the arrangements fo r the guidance and control of the field staff were less than adequate.

MERCILESS SCHEDULE

A rigorous t ime schedule was set by the Committee of Di rec t ion in Bombay for the completion of the various phases of the field work . Inspectors were required to send in fo r t n igh t l y progress reports to prove that they were keeping up to schedule. In Ind ia i t is an old story that if "progress" has to be report­ed, it will be reported. After a l l , what is progress but inkmarks on paper? W i t h heavy workloads, a merciless t ime schedule, and unre­lenting pressure for adherence to i t , what could the men in the field do but f ran t ica l ly fill up forms and send them in without pay ing attention to the qua l i ty or consistency of the data ?

The course followed in 1951-52 by the Committee of Direct ion might perhaps have been par t ia l ly understandable if their Survey were the fifth or s ixth of a series of such surveys which had already explored and re-explored all the major fa­cets of the ru ra l credit scene. But the 1951 Survey was the first of its k i n d in Ind ia . The least that the Committee of Di rec t ion could have done was to define their task as a whole ; and to indicate the phases in which they would cope w i t h i t . There is noth ing in the instructions f rom the Reserve Bank to indicate that all the field work had to be completed in twelve months or less.

F rom the point of view of the Reserve Bank's announced needs for data to formulaic long-term rura l credit pol icy , there would seem to have been no basis whatsoever for so frenzied a pace 17 there was some other ground for the urgency, its nature is nowhere set for th .

F a r m Business A p p r o a c h

Let us now consider whether the sum total of the items included in the RCS schedules and question­naires — even if fi l led up w i t h great care — would have been ade­quate to provide an understanding of the conditions and w o r k i n g of agr icu l tura l credit in Ind ia . On the " supp ly" side the Committee's tar­gets for the collection of quanti tat ive data were ex t raord inar i ly modest. Moneylenders, traders, and agr icul ­

turists w i t h l i q u i d resources were well known to be the chief suppliers of credit in the countryside. So far as concerns the last g roup , the peas­ants who lent money, the Committee, in d rawing up their schedu le for r u r a l families refrained from ask­ing them how much they had lent or were lending. In expla ining this, the Committee declared that they could not hope to get reliable re­plies. They expected that these agriculturists wou ld refuse to dis­close what they lent. When we turn to the only questionnaire d r a w n up for professional moneylenders, we find that here as w e l l the Committee d i d not include questions asking the moneylenders how many loans they had outstanding or what was the total amount of credit they had extended. Nor were these questions put in the questionnaire fo r traders in agr icu l tura l commodities. Even at the outset the Committee seem to have abandoned hope that they could obtain quanti tat ive data on the " s u p p l y " side f r o m the persons in the best posi t ion to know, i.e., the p r i n c i p a l suppliers, themselves.

On the "demand" side the Com­mittee set out direct questions for families as to whether they had borrowed any money d u r i n g the previous twelve months; if so, how much, for what purpose, and f rom what type of supplier. They were also asked if they had made any repayments of old debts d u r i n g the year and how much they stil l owed. For the analysis of these data on borrowings the schedules included certain addi t ional questions on fa-mi ly assets, income and expenditures.

OCCASIONS FOR B O R R O W I N G

However, nothing l ike a complete survey of the family economic posi­t ion was attempted in the general schedule or in the more detailed in ­tensive schedules. The Committee of Direc t ion have explained that because of the large scale of the enquiry , the RCS was not designed to record enough data on any single fami ly so that a proper balance could be struck on either capital account or current account. Instead of an overal l approach the RCS concent­rated on "activit ies directly affecting the debt position........".'Questions

Survey Report, Vo l I , Par t 1 , (Rural Families), p 228. Hence­for th , unless otherwise indicated, all citations of the Survey Re­port w i l l refer to this first par t , Rural Families.

951

were designed in order to b r i n g out transactions presumed "special ly" to lead to borrowings or repayments.

The need to borrow was envisag­ed as spr inging from three sour-ces: f r o m cul t ivat ion, f rom economic activities other than cul t ivat ion, and f r o m the maintenance of the house­hold . Expenditures on these ac­counts were to be recorded in the RCS demand schedules under the respective rubr ics : " f a r m business," "non-farm business," and " f a m i l y l i v i n g . ' ' This three-fold divis ion pro­vided a framework w i t h i n which the attempt was made to ident i fy unusual or large outlays which may have been financed by loans. " I t was ex­pected," the Committee have wr i t ten , "that the bulk of the borrowings would take place in most districts and for most strata of cultivators for expenditure on capital account and for expenditure on durable con­sumption goods or special occasions of fami ly expenditure such as death' marriage and other ceremonies, sick­ness and l i t i ga t i on . " (Survey Re­port, p 402) The approach of the Committee, therefore, was one cal­culated to call to m i n d the individual occasions for b o r r o w i n g ; the more eventful moments of the year, one might say. As contrasted wi th an effort to obtain an integrated picture of the total credit needs of the fami­lies under study, this might be termed a discrete, almost atomistic, approach.

C U L T I V A T O R S AS ENTERPRENEURS

The one subject on which the RCS schedules t r ied to get a f a i r ly fu l l report was what the Committee called " f a r m business" W i t h i n the purview of " f a rm business" the RCS included all the agr icu l tura l acti­vities of every one of the sample families which was found to be cul­t ivat ing land. Each cul t ivat ing fa­mi ly was considered to be engaged in the business of f a rming , to be operating an agr icul tura l enterprise. We read that the RCS was concern­ed wi th "pr ivate household enter­prises engaged chiefly in the busi­ness of agr icu l tu re" or w i t h "the private enterprise sector in rura l I nd i a . " The amount of land cult i­vated and the number of plough cattle owned are referred to as the main constituents of a family's "business resources" (Survey R'' port, pp 115 and 698) .

The type of questions which . the RCS asked about cul t ivat ion fol low-

SPECIAL NUMBER JUNE 1960 T H E E C O N O M I C W E E K L Y

ed the lines of the f a r m business survey techniques as used in Eng­l and and Amer ica . Thus the I n ­tensive E n q u i r y schedules were planned to specify and record cash expenses of c rop p roduc t ion and cash receipts f r o m disposal of agr i ­cu l tura l produce d u r i n g the year under study. The Committee of Di rec t ion seem to have taken i t fo r granted that the most impor tan t credit needs of r u r a l famil ies were those connected w i t h the i r " f a r m business'' operations, and that f a r m business cou ld be isolated f r o m other aspects of f a m i l y l i f e for pur­poses of study. As a coro l la ry they assumed that a survey centered on " f a r m business" transactions d u r i n g a single year wou ld y i e l d the data requ i red fo r comprehending the u n d e r l y i n g problems o f credi t i n the Ind i an countryside. I t cannot be emphasized too strongly that the key to the character and results of the RCS lies in the focus of the Commit tee of D i rec t ion on the cre­d i t requirements of cu l t iva t ion con­ceived as a business enterprise.

W i t h o u t exception, everyone in possession of a b i t of l and w h i c h he cul t ivated qua l i f i ed fo r treat­ment by the RCS as a cul t ivator , a man w i t h a cul t ivated h o l d i n g . Everyone of these cul t ivators was taken to be a f a r m business operator, no matter whether he also engaged in any other economic ac t iv i ty , no matter how much of his w o r k i n g t ime was actual ly devoted to c u l t i ­va t ion , and no matter how much of his income or l ive l ihood was deriv­ed f r o m i t . Thus i f a m a n worked in agr icul ture one percent of his t ime or 100 percent, he was record­ed as the operator of a cul t ivated h o l d i n g ; i f crop p roduc t ion gave a f a m i l y of merchants an insignif ic­ant pa r t of f a m i l y income, that f a m i l y was nonetheless recorded as a cu l t i va t i ng f a m i l y . The Com­mittee of Di rec t ion note the fact that the "cu l t iva t ing fami l ies" constituted an extremely mixed bag. At the top were well-off f o l k , engaged in a num­ber of act ivi t ies; along w i t h cu l t i ­va t ing some land they m i g h t have been act ing as merchants, money­lenders, mil lowners . At the other end there were masses of cult ivators who cou ld not depend on their cul­t ivated ho ld ings ; they had to earn their l i v i n g in par t , " f o r the large m a j o r i t y an impor tan t pa r t , " f r o m other activit ies, p r i n c i p a l l y work­i n g fo r wages fo r others. Regard­

i n g the mi l l i ons and mi l l ions of small cul t ivators w i t h t i n y cult ivat­ed holdings, the RCS tells us that these "are largely par t - t ime cul t i ­vators.... whose economy approx i ­mates ' m o r e to that of non-cult iva­tors... " (Survey Report, pp 887 and 949.)

" F A R M B U S I N E S S " — P O O R G U I D E T O

C R E D I T N E E D S

In the case of the smaller hold­ers, the RCS discovered that, on the average, the receipts f r o m sale of produce d i d not even, cover the cash expenses of the so-called " f a r m business." Large propor t ions of those classified as "cul t iva tors ," the Survey Report states, " fo l low this occupat ion chief ly f o r the retained receipts i n k i n d f r o m f a r m busi­ness...." P 8 2 6 ) . Th i s is another way of saying that these fami l ies produce p r i m a r i l y for their own consumption. Persons or famil ies eating up their own output are not engaged in, ag r i cu l tu re as a "busi­ness/' Rather than being "business­men" or " ag r i cu l t u r a l entrepren­eurs," they are s i m p l y g r o w i n g food so that they can have their da i ly meals. Insofar as these people are concerned, the RCS has had to ad­m i t that details o f " f a r m business" constitute no guide or at best a poor guide to their needs f o r credit .

The approach of the Committee of D i rec t ion to the peasantry re­sembled that of a banker toward his business clients. ( C f Dr H a r o l d H M a n n on the Rura l Credi t Survey in the I n d i a n Economic Review, V o l I I I , No 4 ( D e l h i , August 1957) , p 80.) The Committee wanted to con­centrate on the creditworthiness of the peasants' ag r i cu l tu ra l operations and t r i ed to pu t on the side the i n ­numerable details o f f a m i l y l i v i n g and of non-farm business. In the event they found that " the business of the large b u l k of the small pro­ducers in I n d i a , especially cultiva­tors, cannot be easily separated f r o m their expenditure o n f a m i l y consumption account." Borrowings fo r short-term and long-term "fa­m i l y expendi ture ," the Committee discovered, many times overshadow­ed b o r r o w i n g fo r investment or current p roduc t ion purposes. To ar r ive at an understanding of the operations of the credit system, ac­co rd ing to the Survey Report, it wou ld have been necessary " to take account of the to ta l operations of the cul t ivator in r e l a t ion bo th to

f a r m business and f a m i l y l i v i n g , . . . " (Survey Report , p 402) .

S i m i l a r l y , the chapter on " I n ­vestment and Disinvestment" states that the business and the domestic economy of the cul t ivators are "so mixed that i t would be impossible to obta in any clear idea of deficits or surpluses unless f u l l details of f a m i l y l i v i n g were collected at the same t ime as details of f a r m busi­ness". In par t icular , the Com­mittee conceded that they d i d not "go far enough, or almost not at a l l in to stocks on hand, consumption d u r i n g the year in the f a m i l y or stocks retained for consumption at the end of the year". (Survey Re-port, p 7 6 5 ) .

Since very many of the "cu l t iva ­tors" do not depend on cu l t iva t ion alone, the Survey Report tells us, the approach to credi t needs p r i ­mar i l y th rough f a r m business is inadequate :

" Income obtained f r o m f a r m i n g forms a m i n o r pa r t of the to ta l annual income of a substantial percentage of cul t ivators , and other sources of income have to be resorted to fo r meeting the m i n i m u m consumption needs of the f a m i l y by the majority of cultivators. ( I t a l i cs added). F r o m the po in t of view of the R u r a l Cre­d i t Survey, the measurement of de­f ic i ts of f a r m business by itself wou ld not be, therefore, sufficient. Thus whi le i t may be impor t an t to observe at what size of h o l d i n g or product ion level deficits in agr icul­tu ra l business as such occurred, it is more important to know the sur­pluses and deficits resulting from the total economic activity of the f a m i l y " . ( I ta l ics added) . (Survey Report, p 765)

Th is is tantamount to saying that the attempt to isolate f a r m business f r o m total f ami ly economic ac t iv i ty proved unreward ing .

B O R R O W I N G AS A B A L A N C I N G F A C T O R

I t was fur ther realized that neither debt nor b o r r o w i n g nor consumption were necessarily related to the eco­nomic posit ion of a f a m i l y in a par t icu la r year. The Survey Report advises us that the operat ion of the credit system can best be understood in re la t ion to levels of average ex­pectation of income as a whole. The standard of l i v i n g — or, as the Survey Report puts i t , " the total out lay on consumption goods and services d u r i n g a year" — turned out to be a funct ion , "no t o n l y of

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THE ECONOMIC WEEKLY SPECIAL NUMBER JUNE 1960

the income of the par t icu la r year but is also s ignif icant ly related to the levels of income d u r i n g past years", (p 525.) Peasant famil ies — al l famil ies , in fact — get accus­tomed to a cer tain level of l i v i n g . They go on t r y i n g to l ive at that level, whether or not in any given year thei r total resources are suffi­cient. When they f a l l short, they bor row.

For peasant famil ies , the Survey suggests, b o r r o w i n g may p lay the role of an overal l balancing factor :

" I t is the total requirements whe­ther on p roduc t ion or consumption account, whether in k i n d or in cash, of the business and f a m i l y needs of the cul t ivator or non-cult ivator that have to be matched w i t h the total receipts in cash o r in k i n d , f r o m whatever sources, obtained by the f a m i l y . In this p ic ture of the inte­grated economy of the business and consumption un i t , b o r r o w i n g may w e l l be looked upon as a balancing factor, so that the gap between re­ceipts and requirements of expendi­ture is made up, to the extent possible and for the periods requi­red, by acts of b o r r o w i n g " . (Survey Report, p 2 6 2 ) .

In this case, the Survey Report con­tinues, the announced occasion or purpose of bo r rowing may be " i r r e ­levant" or wi thou t special s ignif i ­cance. Since, however, the schedules were designed to emphasize par t i ­cular occasions for b o r r o w i n g , they d i d not y ie ld the i n f o r m a t i o n needed to understand the func t ion w h i c h b o r r o w i n g actually f u l f i l l e d . ' We read in the Survey Report that :

" I t is not, of course, possible f rom the data collected by us d u r i n g the Survey to measure d i r ec t ly the ex­tent to wh ich , or po in t precisely to the districts in which , b o r r o w i n g d u r i n g the year may be said to have played the role of a balancing factor" (Survey Report, p 5 2 8 ) .

In 1945 the A g r i c u l t u r a l Finance Sub-Committee had already point­ed out in thei r Report that an "occasional" approach to borrow-i n g would be inadequate : " I t is obvious that the purposes or occa­sions of b o r r o w i n g wh ich are capable of being ascertained in a fact f inding invest igat ion po in t merely to the pa r t i cu l a r c i rcum­stances in w h i c h par t i cu la r debts were contracted. They give i n d i ­cations of the o r d i n a r y needs or the ex t raord ina ry circumstances on account of wh ich the cul t iva tor

In order to assess the role of bor­r o w i n g as a ba lanc ing factor, the Committee of Di rec t ion wou ld have had to take an approach exactly op­posite to the one they chose. They would have had to look for total economic ac t iv i ty and total economic posit ion of the famil ies studied rather than for pa r t i cu l a r instances in wh ich f a r m business operations might give rise to credi t needs. " C U L T I V A T E D H O L D I N G " A S U N I T O F

F A R M B U S I N E S S

The focus on fa rm business led the Committee to take as the basic uni t for data-gathering and analysis not the r u r a l f a m i l y itself but the parcel or pareels of land w h i c h each family cul t ivated. As the local counterpart of the " f a r m " , the uni t of agr icu l tu ra l enterprise on wh ich the foreign " f a r m business" surveys centre, the RCS took the "cu l t iva ted h o l d i n g " . Th i s was defined to i n ­clude the land operated by a f ami ly , whether owned or rented i n , but to exclude any other f a m i l y l and which the fami ly d i d not themselves cul­tivate.

A n y plot of land larger than a mere garden patch (no specific c r i ­ter ion appears to have been set) qual if ied as a "cu l t iva ted h o l d i n g " . These "cul t ivated hold ings" were crudely ranked by size in physical acres regardless of qua l i ty of soil or adequacy of water supply. Since the r a n k i n g left out of account l and owned but not cul t ivated, a f a m i l y of large holders who worked on ly a small par t of the i r l and and rent­ed out the rest m i g h t well be found in the list below some of their larg­er tenants. Nonetheless this rank­ing served as the basis upon which the cu l t iva t ing famil ies were d iv ided into ten equal groups ("deciles" or "s t rata") in terms of w h i c h the data were compi led and analysed.

had to seek financial help. By themselves they do not constitute the causes of either the par t icu lar debt or the general fact of indeb­t edness . An enqu i ry in to the causes of indebtedness wou ld have to t ravel much beyond the investi­gat ion of each occasion of borrow­i n g . It wou ld necessitate a thorough study of a l l aspects of the agr icul tur i s t ' s l i f e " . Report of the Agricultural Finance Sub­committee appointed by the Gov­ernment of India on the recom­mendation of the Policy Committee on Agriculture' Forestry and Fisheries (New Delhi, 1945) , p 13.

I t was apparently believed that differences in scale of f a r m business operations, in credi t needs, in total debt etc wou ld by and large reflect differences in size of the "cul t ivated ho ld ings" .

S I G N I F I C A N C E O F O W N E R S H I P H O L D I N G

When they came to interpret the data, however, the Committee of Di rec t ion were forced to the chasten­i n g conclusion that the "cul t ivated h o l d i n g " was of severely l i m i t e d use for the understanding of bor­rowing . In the words of the Survey Report :

". . . the cul t ivated ho ld ing is sig­nificant chiefly for short-term product ion credit . In relation to medium-term and especially long-te rm product ion credit , on ly in a l imi ted number of cases wou ld bo r rowing operations depend on the size of the cul t ivated ho ld ing . They migh t depend much more closely on the size of the owner­ship h o l d i n g / ' '

"Ownership h o l d i n g " , as d is t in­guished f rom cultivated hold ing , refers to land he ld by f ami ly in f u l l ownership r ights . People are much more l i ke ly , the Survey Report slates, to make las t ing investments in agr icu l tu ra l land wh ich they own, rather than in land wh ich they rent f rom others. ( P . 6 5 7 ) .

The Survey Report contains a dis­cussion of debts in relat ion to cu l t i ­vated holdings . But for many purposes, the Committee go on to state, "the more impor tan t relation wou ld be that of debt w i t h the assets of the c u l t i v a t o r ' . Almost every­where, they note, owned land con­stitutes the most impor tant single i tem of assets, it is also, they i n d i ­cate, the most stable asset. Owned land is the basis for c red i twor th i ­ness. In the language of the R C S : "the value of owned land w o u l d also p robab ly represent the measure in relat ion to wh ich the credit w o r t h i ­ness of most cu l t i va t ing families was judged by credit agencies." (Survey Report, pp 115 and 137. See also p 132 and p 564.)

This has long been an outstanding feature of the ru r a l credit posit ion

' Survey Report, p 115. Near the end of this same volume it is stat­ed : "The requirements for me­d ium- te rm and long-term credit are comparat ively larger than those for short-term credi t . " (P 1012)

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in I n d i a . As they say in the N o r t h , "a man's haisiyat is h is l a n d " . A f t e r a l l , i t is not a "cu l t i va ted h o l d i n g " wh ich walks over to the moneylender's verandah and seeks to obta in a loan. Rather it is a peasant who comes f r o m a fami l y wh ich may have been deal ing w i th the moneylender and the moneylend­er's forefathers fo r one or more generations. The moneylender is l ike ly to know a good deal about the peasant's f am i l y , to have a fa i r idea about the var ious f a m i l y mem-hers and what they are do ing . A l ­though the loan may be extended to one member, the moneylender, in effect, is g i v i ng credi t to the fam i l y . In do ing so, the moneylender gives heavy weight to the sol id assets of the f a m i l y , among which there is no th ing so good as fu l l y owned land that the f am i l y , i f need be, can pledge and alienate. The heart of the ru ra l credit structure in Ind ia is the re la t ionship between the credi tor and the fami ly -cum- fami ly assets. As against these realit ies, the Com­mittee of D i rec t ion chose to concent­rate on an abstract ion cal led the "cu l t i va ted h o l d i n g " . I n their pre­occupat ion w i t h this al leged " u n i t of fa rm business", the Commit tee never even bothered to ask on any of thei r schedules the size or type of the f am i l y , the number of f am i l y members, the number of adul ts, or the number of wo rk ing members—-surely matters of s igni f icance fo r bo r row ing and lend ing.

O W N E R S H I P D A T A N O T T A B U L A T E D

The Survey Report states that, despite the fundamental impor tance of the "ownersh ip ho ld ings " in terms of investment and as a basis for b o r r o w i n g ' these cannot be as­certained from the general schedule data per ta in ing to 127,000 fami l ies . " F o r the fami l ies investigated using the General Schedule" , we read, " there is no ind icator of re lat ive economic posi t ion other than the size of cu l t ivated h o l d i n g . " Regard ing the relat ion of debt w i t h the assets of the cu l t iva tor , i t is asserted: " I n ­fo rmat ion on this po in t is avai lable only th rough the intensive enquiry." ' {Survey Report, pp 08 and 115)

Since the point is of paramount s igni f icance, let us t u rn to the general schedule. I t begins w i t h an in t ro­ductory group of questions wh ich locate and ident i fy the household, i ts head, caste and occupat ion. Then fol lows a b lock of 14 questions per­ta in ing to land wh ich are reproduced

unchanged as f o l l o w s :

2.1 Do you own any land?

2.2 If so. what is its area?

2.3 What is the land revenue you pay to Government?

2.4 Have you leased out any part of land owned by you?

2.5 If so. what is its area?

2.6 Have you taken any land on lease?

2.7 If so. what is its area?

2.8 Have you given possession to a credi tor under usufruc­tuary mortgage any part of land owned by you?

2.9 IT so. what is its area?

2.10 Have you in your possession as credi tor under usufructu­ary mortgage any land?

2.11 If so. what is its area?

2.12 Tota l area under your cul t i ­vat ion ( i nc lud ing current fa l low} du r i ng the current agr icu l tu ra l year?

2.13 Number of plough cattle owned

2.14 Strat i f ied serial number

Technical Report, p 965.

Clear ly, the RCS collected data on "ownersh ip ho ld ings" against Ques­tions 2.1 and 2.2 of the general schedule. Detai led i n fo rma t ion on the leasing and mor tgag ing of land must have been obtained f r o m the subsequent Hems. What , then, is the meaning of the assertion, quoted above, that the general schedule yields "no indicator of relative eco­nomic posi t ion other than the size of cul t ivated h o l d i n g ? " Inc red ib le as it may sound, the fact is that data on ownership holdings (a long w i th the leasing and mor tgag ing data) were collected but not tabulut-ed. Kef e r r i ng to the general sche­du le questions on land, the Survey-Report states that " the ma in objec­t ive of the questions regard ing hold­ings was to obtain estimates of the size of cul t ivated holdings, so that its relat ion to size of recorded trans­actions such as bor rowings and re­payments might be examined." The in tent ion, it is exp la ined, was "no t to enquire into the assets, i e, the capi ta l wor th of the cu l t i va t ing fami l y , but into the size of its busi­ness resources, the main constituents

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of wh ich are the cul t ivated ho ld ing and l ivestock" . (Survey Report, P 115)

Thus the Committee of D i rec t ion obtained and held in the i r hands data on the most impor tan t assets of their o r i g ina l sample of 127,000 famil ies. In thei r preoccupat ion w i t h "cu l t ivated ho ld ings" , they pu t these data aside and never made use of them. Later, when they found that for many purposes data on assets were more impor tant than data on " f a r m business", they had to make do w i th materials f r o m the intensive enqui ry per ta in ing only to 9,000 fami l ies .

PRICE OF POLICY ORIENTATION

It may be that the Committee's preoccupat ion in 1951-52 w i th " c u l ­t ivated ho ld ings ' ' bore some relat ion to an impor tan t change in pol icy then occur r ing in agr icu l tu ra l credi t in Bombay. At that t ime the Bombay Slate Cooperat ive Bank, and the Bombay cooperat ive movement in general, were exper iment ing w i th a shift away f r om credit l inked w i th assets (ownership ho ld ings) to cre­d i t l inked w i t h product ion (cul t ivated ho ld ings ) . In this they had the blessings of the Reserve Bank. The Rural Credi t Survey of the Reserve Bank was l a id out in such a way as to fac i l i ta te the collection of data per ta in ing to cu l t iva t ion, cul t ivated holdings, and crop loans. One of the chief recommendations that emerg­ed f rom the Rural Credit Survey was precisely a shift of this nature on an A l l - I nd ia basis: a shi f t f r o m the "asset-nexus"" to the "p roduc t ion -nexus" . In p lann ing their Survey perhaps the Commit tee of

Di rect ion al lowed themselves to be carr ied away by their v is ion of what rura l credit ought to be or become, at the expense of get t ing a balanced account of the structure of r u ra l credit as it actual ly was.

A f te r all the f ield work was over, the Committee found that the sum total of quant i ta t ive data collected d id not add up to a sufficient basis for the analysis of the credit needs of peasant fami l ies . The i r materials were inadequate fo r descr ib ing either total economic ac t iv i ty or overal l assets posi t ion of the peasant cu l t i -vators. For the peasant sector the Commit tee could asses.neither stocks nor flows. The Committee were, therefore, in no posit ion to deal with such complex topics as investment and disinvestment, capital fo r rnat ion

SPECIAL NUMBER JUNE 1960 THE ECONOMIC WEEKLY

savings and deficits, shifts in income and f low of funds. T h i s is in 'fact conceded in the chapters of the Sur­vey Report devoted to these topics ' The hundreds of pages in wh ich these subjects are discussed lead nowhere.

U N S U I T A B L E C O N C E P T U A L

F R A M E W O R K

The RCS failed to get the data needed for an understanding of r u r a l credit because its conceptual frame­work was unsuited to the I n d i a n countryside. The f a r m business ap­proach wh ich the Committee of Di rec t ion adopted had been develop­ed in the U K and the U S A where the economic organizat ion of ag r i ­culture is qui te different. In those countries f a r m i n g is car r ied on main­ly as a business. Regular accounts are maintained, and p rof i t or loss calculated. The farmers produce chiefly for the market . Even in the case of food crops the amounts w h i c h f a rm families keep for home con­sumpt ion are usually t r i v i a l as com­pared w i t h total p roduc t ion . The usual practice in Amer i can f a r m business studies has been to ignore these retentions fo r home use.

In Ind i a , by contrast, food crops are g rown p r i m a r i l y to feed the growers themselves. It has been estimated that only about one-quarter to one-third of India ' s r ice and wheat enters the m a r k e t , ' The amounts which are kept by the peas­ants for thei r own food represent the great bu lk of the product . Even among agricul tur is ts who no rma l ly sell part of the i r output , o n l y a minor i ty may he characterized as entrepreneurs or businessmen.

For the great m a j o r i t y of I n d i a n peasants, f a r m i n g is not a business entered into for prof i t but a here­d i t a ry occupation ca r r i ed on chiefly w i t h f ami ly labour for f a m i l y suste­nance. They keep no books and reckon no costs. An ag r i cu l tu ra l year is good if something is left over at the end. Peasant f a r m i n g in I n d i a is inext r icably woven in to the fab­r ic o f peasant f ami ly l i f e . To r i p cul t ivat ion out of its f a m i l y context and to pretend that it is business enterprise is to distort r u r a l rea l i ty

' Cf, Government of Ind ia . First Report of the National Income Committee. (New Delh i , A p r i l . 1951 . p 3 0 ; also. Government of Ind i a , M i n i s t r y of Food and A g r i ­culture, Report of the Food grains Enquiry Committee (New D e l h i , 1957) . "pp 188-89 and 44-45.

i n I n d i a .

Qual i ty of the D a t a

The method of f ie ld w o r k upon which the RCS rel ied almost exclu­sively was that of o ra l in te rv iew. For th is purpose, as we have seen, a series of schedules were prepared and taken around i n the sample v i l ­lages. AH data obtained by inter­v iewing are subject in one degree or another to what has been called the "er ror of response." Th i s is the possibi l i ty that the entry made by the investigator may not represent the true answer to the questionnaire item in respect of the person being interviewed.

There are fields in w h i c h the er­rors of response may be expected to he very large as, say, in connection wi th sensitive subjects on w h i c h questions may be resented, e.g., boot-legging , se l l ing o p i u m , sex relations, gambl ing , tax evasion, etc. Other enquiries that may be expected to give rise to substantial errors of ob­servation are those i n v o l v i n g compli ­cated calculations, e g, asking auto­mobile owners to recall and appor­t ion their annual costs for mainte­nance, repair , depreciat ion, and re­placement. Fur ther , there are enqui­ries wh ich put questions for wh ich the experience of the respondent has not prepared h i m . It is not that these are necessarily complex ; it is s imply that the respondent may not know what to make of them. In communit ies wi thou t clocks respond­ents should not be asked to state in exact numer ica l terms how many hours a day they w o r k ' F ina l ly , any battery of questions that is very long runs the r isk of so weary ing the respondent that he may end up by g i v i n g any sort of answers what­soever, so long as he can get the interviewer to go away and bother somebody else.

ERRORS OF R E S P O N S E

The RCS invi ted large e r rors of response on each of the counts just listed. In the first place, debt is a pa in fu l subject, not l i ke ly to be discussed easily or candid ly w i t h anyone, let alone casual strangers ca r ry ing formidable questionnaires. Quite a significant p r o p o r t i o n of creditor-debtor relations in v i l lage India are on the f r inge of the law, or pay no heed to the law. Such relations are often fur t ive and sur­repti t ious. Even when they are open and flagrant, the peasant may not be prepared to ta lk about them wi th outsiders. To the peasant, the

moneylender is l i k e l y ' to be "at once a necessity and a ter ror" .* The peasant m i g h t l i k e to curse h i m , bu t may f ind i t wiser to kep m u m .

Some of the most impor t an t ques­tions were so couched that accurate answers could h a r d l y have been ex­pected. An example of a compl i ­cated i t em r e q u i r i n g the respondent to make a series of mental compu­tations is found in the general sche­dule. Under the broad topic of "cap i ta l expendi ture" the heads of 127,000 famil ies were asked how many rupees they had spent d u r i n g the preceding twelve months on capi ta l expendi ture in non-farm business' The recall pe r iod was long . The po in t where f a r m i n g gives way to "non- fa rm business" may be obscure, as in the case of conver t ing sugarcane ju ice into gur (unref ined sugar ) . The dis t inct ion between capi tal expenditures and other expenditures-—say in renovat­ing a wooden l o o m — i s delicate. I t is not su rpr i s ing , therefore, that only 5 per cent of all those interviewed reported any capi ta l expendi ture whatsoever on non-farm business.+

Under the rub r i c of capital invest­ment in agr icu l ture , the head of each household was asked how many rupees he had spent d u r i n g the pre­ceding twelve months on "construc­t ion of f a r m houses, cattle sheds, etc." Fur ther along in the same schedule, under the rub r i c , " f a m i l y expendi ture" , he was asked how many rupees he had spent d u r i n g the preceding twelve months on the "construct ion and repair of residen­t ia l houses and other bu i ld ings" . But how was he to dis t inguish ex­pendi ture under this head f rom the previous question ("const ruct ion of fa rm houses etc.") when, as is so

' A l t h o u g h i t pertains to X V I t h Century England, there is much of comparat ive interest in the mast­e r ly in t roduc t ion by R H Tawney to his edi t ion of Thomas Wilson's Discourse upon Usury' London , Bell and Sons. 1925. See in par­t icular , pp 17-30.

+ Survey Report, p 550. It is not easy to fol low the instructions to the field staff for the recording of this i tem. As reproduced in the Technical Report, these read : " A n y f o r m of business expenditure in­cur red on current account as wel l as purchase of supplies fo r re-sale or speculation purposes should be entered . . . " Technical Report, p 13.

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often the case, h i s f a r m house, cattle shed, and residential house were one and the same s t r u c t u r e ? ' '

A g a i n , the heads of households were asked in the Intensive E n q u i r y schedules to state the i r cash receipts f rom sale of var ious types of crops and livestock products . T h i s sort of

question would have presented l i t t l e difficulty to the peasants i f , as in

large u rban shops, they made out sales sl ips for each transaction and kept regular business accounts. India ' s peasants, needless to say, f o l ­low no such practise. Those who do sell crops, sell them at different times of the year, in different am­ounts. There may be relat ively large sales after the harvest of the p r inc ipa l crop, smaller sales after the harvests of the lesser crops, i r re­gular sales of m i l k , eggs, pou l t ry , f r u i t , vegetables, etc. The peasant's style of l i f e does not put h i m in a posit ion to answer quant i ta t ive ques­tions about cash sales. The best he r a n do, under persistent p rodd ing f rom an investigator, is to indulge in plausible guesswork.

BOOK-SIZE QUESTIONNAIRE

The most manifest of the sins of the RCS was in regard to the num­ber and to the length of thei r sche­dules and questionnaires. I f the blank schedules, etc, were a l l to be bound together between one set of rovers, they would fill 100 pages of an o rd ina ry octavo-size volume. N o t all the questions were put to any one f a m i l y ; about ha l f of them were put to each of the 9,000 famil ies covered by the intensive enqui ry and a num­ber of schedules were filled up a second t ime on a r e tu rn vis i t . Hence. about 66 pages of octavo size were used up for each of these 9,000 famil ies .

W i t h regard to capi ta l expendi­ture in agr icul ture the Survey Re­port ra i ls at tention to another source of weakness in the data. The RCS treated capi ta l expendi ture in agr i ­culture under three main heads; purchase of land, purchase of l ive­stock, and "other capi tal expendi­ture in agr icu l tu re" . This last g roup included expendi ture on land reclamation, bunding , wells and other i r r i ga t i on resources, new orch­ards, purchase of implements and

' ' T h e general schedule used in the Rural Credit Survey is reproduced, a long w i t h blank specimens of a l l the other schedules and question­naires, in the Technical Report, pp 965-1014.

machinery, f a r m b u i l d i n g construc­t ion , and miscellaneous. In the actual returns, la rger sums were re­corded under "other capital expen­di tures" than under either purchase of land or purchase of livestock. The qua l i ty of the data for the various items treated under "other capital expenditure in agr icu l tu re" is indicated by the f o l l o w i n g passage in the Survey Report :

" T h o u g h f a i r l y elaborate ins­tructions were issued to Investi­gators regard ing the coverage of various items or groups of items there was inevi tab ly some varia­t ion in the in te rpre ta t ion of these instructions. W h i l e i n some i n ­stances the Investigators t r i ed to cover even the smallest expendi­tures and obtained reports f r o m a very large p ropor t ion of famil ies , in others the repor t ing seems to have been confined to on ly expen­d i ture of a large size, and is, therefore, reported fo r only a small p ropor t i on of families. Var ia t ions f rom dis t r ic t to d is t r ic t in the propor t ions of famil ies i n c u r r i n g expenditure in re la t ion to pa r t i ­cular items may be due pa r t l y to such va r i a t ion in in te rpre ta t ion ," (Survey Report, p 638.)

S i m i l a r l y , the returns for par t i -cular groups of f ami ly expendi­ture, the ..Survey Report states, show large and i r regula r variations, especially in regard to the p ropor t ion of famil ies repor t ing expenditure in various distr icts :

" I n a l l items, i nc lud ing items re la t ing to expendi ture on cere­monies, there appears to have been some var ia t ion in interpreta­t ion of the scope of the questions. At one extreme, almost 100 per cent of the respondents in pa r t i ­cular districts were reported as hav ing incur red expenditure on many of the i tems; at the other extreme, reports of on ly exception­a l ly large expenditures were evi­dently entered in the general sche­dule owing to a somewhat nar row interpretat ion of the scope of the i tems." (Survey Report, pp 402-03.)

CROP OUTPUT ESTIMATE

When schedule design flouts the first pr inciples of the survey method, large errors of response may be ex­pected. T o t a l l i n g the returns may cumulate the errors. Something of this sort seems to have happened w i t h the RCS A l l - I n d i a estimate of the "gross value of ou t tu rn of c rop" .

" V a l u e of p roduce" data were ob­tained only f r o m the 9,000 intensive enqu i ry famil ies . The RCS attached considerable impor tance to the calcu­lation of a figure in rupees for the total value of crop ou t turn d u r i n g the year for each of these families. For purposes of analysis, the inten­sive enqui ry fami l ies were g r o u p e d ' by "value of gross p roduce" as wel l as by number of acres cul t iva ted . The value of produce figure was taken by the RCS as a more refined measure of the size of " f a r m busi­ness" than the cul t ivated acreage figure.

Weigh t ing , averaging, and inflat­ing the sample data to nat ional p ro ­port ions, the Committee emerged w i t h a 1951-52 A l l - I n d i a figure fo r gross value of crop produce of Rs 2,921 crores (or , in terms of thous­ands of mi l l ions , of Rs 2 9 . 2 ) . (Sur­r ey Report, pp 1064-66.) As ag­ainst their own figure, the Commit­tee cite the figure subsequently ob­tained by the Na t iona l Income Com­mittee of the Government of Ind i a . This official figure, they had expect­ed, w o u l d be qui te close to the i r own . The Nat iona l Income Com­mittee figure fo r gross value of out­put of crops in 1951-52, however, turned out to be Rs 4,887 crores (or , in terms of thousands of mi l l i ons , Rs 48 .8 ) . Thus the National I n ­come Committee figure is 67 per cent higher than the RCS estimate. The RCS Committee of Di rec t ion take the h igher figure as more authorita­t ive than their own . Thus we read in the Survey Report that the RCS underestimation was large, say " o f the order of 50 per cent of the re­ported value of gross produce.. . ." ( p 824)

REASONS FOR D I S C R E P A N C Y

In discussing the reasons for the discrepancy the Committee of Direc­tion note that crop product ion was a sensitive subject in 1951-52. In most of the States of I n d i a there was at the t ime one or another type of governmental control of sugar and foodgrains: procurement, price con­t r o l , r a t ion ing , or a combinat ion of these The effectiveness of these controls v a r i e d ; so d i d the degree of b lackmarket ing . In this context, the Committee observe, the peasantry may have understated the physical quantit ies of 'foodstuffs produced. Fur thermore , the prices which the peasants reported to the investigators may have been lower than the .ones at wh ich they really sold. There was

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no at tempt at objective ver i f ica t ion, whether of acreage, or yields, or of r u l i n g prices.

In the second place i t is difficult to secure i n f o r m a t i o n on all crops at one t ime . The Committee report that the RCS investigators concen­t ra ted on the m a i n crop, whether food grains or indus t r ia l crops l ike cotton and sugarcane' T h e mino r crops in each area were under-emphasised or even altogether neg­lected. Taken as a group , however, these minor crops account for 25 per tent or more of the value of total crop product ion .

Fur thermore , as we have noted above, the I n d i a n peasantry do not keep p roduc t ion records. I t was too much to expect them to rattle off de­ta i l after detai l of crop acreage, y ie ld , and scle pr ice . Lastly, the huge sets of "books" to be filled up, could not help but be endlessly wear-y i n g both to the peasant and to the investigators. What else could the field men do but gloss over details and move on?

Reflection in advance on these matters surely should have stayed the hands of the Committee of Di rec t ion . W h i l e some matters can be probed f ru i t fu l ly by oral interview, there are others which require direct , phy­sical observation. Data for many of the items included in the RCS questionnaires could have been ob­tained only by s ta t ioning investiga­tors w i t h small groups of households throughout the per iod of enqu i ry . Fur thermore , to secure re l iable i n ­fo rmat ion , those investigators w o u l d have needed thorough t r a i n i n g as wel l as f a m i l i a r i t y w i t h the subject matter in its local setting. Th i s type of work , of course, could scarcely have been car r ied out on an a l l - Ind i a scale in a single survey l im i t ed to a single year.

Design of the Survey We may recall that, according to

the instructions f rom the Reserve Bank, the Committee of D i rec t ion were to plan an A l l - I n d i a Survey w h i c h would cover all agr icu l tura l strata in representative parts of the country . The selection of units to be studied was made in three stages. The first stage was the selection of 75 out of India ' s 302 adminis t ra t ive districts. In the second stage, 600 villages were selected, 8 in each of the 75 sample distr icts . Every f ami ly in these 600 villages, 127,000 famil ies in a l l , was canvassed w i t h the general schedule. At the t h i r d

stage, 15 families were selected f r o m the total number of cu l t iva t ing fami­lies i n each of the 600 sample v i l ­lages. In this way, 9,000 families were chosen for detailed study by means of the intensive schedules.

The purpose of conducting a sample survey on an Al l - Ind ia scale is obviously to ob ta in A l l - I n d i a data. It is only reasonable to assume that what the Reserve Bank expected f rom the RCS as a basis fo r formu­la t ing nat ional ru ra l credit po l i cy were, f i rs t ly, A l l - I n d i a results and, secondly, breakdowns for the major regions. As we have noted, the Committee of D i r ec t i on reported in December, 1952, that they were pre­pa r ing A l l - I n d i a and regional tables.

As tabulat ion and analysis pro­ceeded, however, the Committee of Di rec t ion seem to have lost confi­dence in the representative nature of the data wh ich had been collected. They came to the conclusion that their materials could not be used to make va l id estimates cither for Ind ia as a whole or for any major region of the country. The data, we read in the Summary p r in ted in 1955. "are representative of only the selec­ted units of the sample". (Summary of Survey Report, 1955, p 4.)

" P E C U L I A R N A T U R E O F S A M P L E

Instead of A l l - I n d i a averages or propor t ions , the text tables in the Survey Report give figures for "the 75 districts taken together". ' C f . the tables given at pp 293, 533, 550 and 5 7 1 ) . Al te rna t ive ly , we f ind innumerable frequency dis t r ibut ions of the 600 sample villages or of the 75 districts. The Committee, how' er, no t i fy us at. the outset that "in presenting a frequency d i s t r ibu t ion of the 75 districts in respect of any character measured, such as ou t ' s tanding debt, no c la im is made that the d i s t r ibu t ion of the 302 distr icts from wh ich the sample was drawn w o u l d show the same pattern. This is due to the peculiar nature of our sample Notwi ths tanding the largeness of the sampl ing propor­t ion , namely, one in four, and the fact that the sample covered a l l tracts of the country, it would be wrong to assume that the pattern of d i s t r ibu t ion for the country as a whole is accu­rately depicted in the d i s t r ibu t ion of the sample." (Survey Report, p 1 1 ) . S imi la r disclaimers are issued ag­ainst t ak ing the findings f rom the eight villages in any distr ict as re­presentative of a l l villages in that d is t r ic t . We are to ld that "the dis-

959

t r ic t data mean, for a l l purposes for w h i c h the data were collected, the data for the villages in the sample," (Survey Report, p 9 ) . Even more forceful disclaimers regarding the representative character of the data are made w i th respect to States and regions larger than States.

The Committee of Di rec t ion , in fact, wou ld have us believe that to get representative data was not one o f their p r i m a r y aims. " [ O u r ] main objective", they have wr i t t en , "was a study of conditions, not neces­sar i ly of areas identif ied w i t h cer­ta in names or w i t h fu l l areas but w i t h samples of va ry ing condit ions throughout the country. .. " {Sur­vey Report, p 1 0 ) . The Survey was planned, they tell us, "not w i t h a view to obta in ing estimates for the country as a whole, of size of aver­age outstanding debt, bor rowings or repayments, but was directed chiefly towards ob ta in ing an idea of the w o r k i n g of the agr icul tura l credit system in regions representative of ai l types of condit ions exist ing in the count ry" . (Survey Report, p 162) . The sample of districts, we are told, was d r awn "not particular­ly w i t h a view to mak ing v a l i d estimates for the .102 districts as a whole" (Survey Report p 11) .

DRAWING OF SAMPLE DISTRICTS

The method by which the sample of distr icts was d r a w n is rather obs­cure. In a progress report made in A p r i l , 1952, tile Committee of Direc­t ion informed the Reserve Hank that a strat if ied random sampling proce­dure had been fol lowed.

"For the purposes of the sur­vey, the whole country was d i v i d ­ed into a number of 'homogene­ous' geographical regions, on the basis, firstly, of the preponderance or otherwise of cash crops and, secondly, of the percentage of area under i r r i ga t i on . A certain num­ber of distr icts was then selected f rom each region on the random sampling m e t h o d "

Subsequently, however, in the author i ta t ive Summary Report (pub­lished in 1955) no statement was made on how the distr icts were selected. Th i s is puzzling, all

' Reserve Bank of India , Standing Advisory Committee on Agr i cu l tu ­ral Credit Proceeding' of the Se­cond Meeting, held in Bombay on 24th and 25th April 1952 (Bombay. Reserve Bank. 1952) , p 34.

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the more so since the mode of selec­t i o n of the sample vil lages is des­cr ibed in precise statistical langu­age as " o n the random sampl ing basis w i t h p r o b a b i l i t y of selection p ropor t iona l to the popu la t ion of the v i l l age . " The phrase "at random' ' is also used to characterize the selec­t i o n of intensive enqu i ry families w i t h i n the sample villages. (Sum­mary of The Survey Report, Bom­bay, 1955. pp 4 and 1 ) .

Nor do we find any explanat ion of the way the 75 distr icts were chosen in the f u l l vers ion of the Survey Report w h i c h appeared in 1956. As against this reticence in regard to the distr icts , we read in Chapter 1 that the villages "were selected w i t h p r o b a b i l i t y propor­t ional to popu la t ion" , and that the famil ies for the Intensive Survey were chosen "a t r a n d o m " after stra­t i f ica t ion . (Survey Report' pp 12 and 5.)

By contrast, in the Technical Re­port (publ ished at the end of 1956) we come again upon the c la im that the selection of the distr icts was "at r andom" , this t ime, however, in two versions w h i c h are not qui te con­sistent. F r o m the in t roduc to ry dis­cussion of "Selection of Sample Uni t s , " i t w o u l d appear that the procedure had included strat i f icat ion w i t h regard to three factors:

" I n m a k i n g the selection i t was considered desirable that the sam­p le should be representative of the geographical and ag r i cu l tu ra l re­gions of the country . T w o factors representative of ag r i cu l tu ra l con­di t ions wh ich were taken in to con­sideration fo r th is purpose are the percentage area under cash crops and the percentage area under i r r i ­gat ion. Subject to considerations regard ing these two factors and geo­graphica l representativeness, the selection of the 75 distr icts was made at r andom f r o m among the 302 dis­t r ic t s . " (Technical Report, pp 3-4.) A c c o r d i n g to the A p p e n d i x on sam­p l i n g errors, however, the method would seem to have been unstrati-f i ed s imple random s a m p l i n g :

"The first stage in the sampl­i n g process was the selection of dis t r ic ts at random and w i t h equal p robab i l i t y f r o m among the to-tality of districts in, the country. ' ' (Technical Report, p 1037. Ita­lics a d d e d — D T ) .

T h i s contradic t ion i s reflected in the descript ion of the overall sampl­

i n g scheme in the Technical Re' port as "multi-stage w i t h stratific­at ion at some of the stages." (Techni ­cal Report, p 1037. I ta l ics added

— D T ) . W e know that w i t h i n each sample' d is t r ic t the vi l lages were stratif ied in to those w i t h w o r k i n g credit societies and those w i t h o u t We also know that the famil ies w i t h i n each sample v i l l age were strat if ied in to ten groups according to size of cul t ivated holdings . The only stage in respect of which i t is not quite clear whether there was stra­t i f ica t ion or not is the first , t h e s e ­lect ion of the sample distr icts . The phrase, "s t ra t i f icat ion at some of the stages," evades the question w i t h regard to the first stage.

W A S T H E S A M P L E R A N D O M ?

Return ing to the problem of whe­ther the 75 dis tr icts were in fact d r a w n at random, we note that the discussion of sampl ing errors of estimates in the Technical Report refers on ly to the d i s t r i c t estimates, that is, the estimates based on the data f r o m the 8 sample villages in each dis t r ic t . No attempt is made to discuss or calculate the sampl ing er ror of estimates at the A l l - I n d i a level, that is, the estimates based on the data f r o m the f u l l sample of 75 distr icts . (Technical Report, pp 1035-45.) Th i s omission would be just i f iable only i f the districts had not been selected at random. The ambigu i ty of the RCS in res­pect of the randomness of the first-stage sample may provide a clue to the unusual h u m i l i t y displayed in respect of the va l i d i t y and represent­ativeness of the data.

At the outset, the Committee of Di rec t ion fa i led to define the p r i ­mary a im of the survey. Given the available resources, they were not in a pos i t ion to obta in estimates of good r e l i ab i l i t y bo th fo r I n d i a as a whole and also i n d i v i d u a l l y for 75 districts. H a d the Committee been clear f r o m the start that they intended to aggregate their data at the A l l - I n d i a level, they wou ld per­force have had to conform s t r ic t ly to the p r inc ip les of random selec­t ion of sample units . T h e y would also have done better to scatter the 600 sample villages more w i d e l y throughout I n d i a , that is, in more than 75 of the 302 districts.

I f , however, the Committee felt that the sound course lay in focus­sing their efforts on i n d i v i d u a l dis­tricts, the par t icu la r distr icts to be

studied m i g h t w e l l have been select­ed purposively in the l i g h t o f the Committee's p r i o r knowledge and par t icular interests. In th is case, the 600 sample vi l lages migh t more f r u i t f u l l y have been concentrated in a much smaller number of districts than 75, in order to ensure greater accuracy of representation at the dis t r ic t level .

The design wh ich was adopted appears to represent an unhappy compromise between conf l ic t ing ob­jectives. I t was efficient neither for ob ta in ing A l l - I n d i a estimates nor fo r obta in ing district-wise estimates.

D I S T R I C T A S B A S I C U N I T

The Survey Repor t states that the adminis t ra t ive d is t r ic t was taken as the "basic u n i t ' ' of study for the reason that : " this was the smallest un i t for w h i c h i t was possible to present a compara t ive ly f u l l p ic ture of the credit system on its 'demand1

side and also on the ' supply ' side at various levels," The study was directed, we are to ld , towards ob­ta in ing "integrated d is t r ic t samples of the w o r k i n g of r u r a l credit ma­chinery ." (Survey Report, pp 9 and 11).

To a im at an integrated d i s t r i c t p ic ture of the demand and supply of ru ra l credi t is to seek the non­existent. Credi t operations in the I n d i a n countryside are, above a l l , local and unorganized. Loans are advanced ch ie f ly by vi l lage money­lenders or traders who funct ion as l i t t l e monopolists. There may be thousands of separate " ce l l u l a r " cre­d i t markets of this type in a single d is t r ic t . The heart of the r u r a l cre­di t p r o b l e m in I n d i a has been pre­cisely the discreteness of money­lender-borrower relationships. I t was premature, to say the least, to speak of the " w o r k i n g of r u r a l credit ma­ch inery" at the d is t r ic t level . In most of r u r a l I n d i a machinery had not yet developed for b r i n g i n g supply and demand together at any level h igher than the vi l lage.

There was, however, one special sense in which the adminis t ra t ive dis t r ic ts served as units in respect of r u r a l credit . In the officially spon­sored co-operative movement each dis t r ic t , no matter how large or how varied, was considered the sphere of j u r i s d i c t i o n of a D i s t r i c t Central Co-operative Bank. A programme of w o r k i n g th rough one, and only one, of these Central Banks in every dis­t r i c t already had the suppor t of

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T H E E C O N O M I C W E E K L Y SPECIAL NUMBER JUNE 1960

the Reserve Bank . This p o l i c y was strongly re-affirmed in the recom-mendations of the Committee of Di rec t ion . I t i s possible that in, fo­cussing the RCS on the dis t r ic ts the Committee were influenced by their interest in strengthening the net­work of Dis t r ic t Central Co-operative Banks.

SECOND-STAGE SAMPLE

The second stage of the sampling process was the selection of 8 v i l ­lages in each of the 75 distr icts . Th i s meant that 75 different sampl­ing fract ions were employed. Eight out of 334 villages were taken in S i roh i d is t r ic t of Rajasthan, and eight out of 10,517 villages in M i d -tmpur d is t r ic t of West Bengal. In S i roh i , then, the second-stage sampl­ing f rac t ion was roughly 1 vil lage out of 40, whereas in M i d n a p u r i t was 1 out of 1,300.

In point of fact, two random samples of four vil lages each were d r a w n in each dis t r ic t , each sample being d rawn separately. The f i rs t sample of 4 villages in each dis t r ic t was d r awn f rom a list of villages reported to contain w o r k i n g p r i -mary cooperative credit societies. The second sample of 4 villages in each dis t r ic t was d rawn f rom a l ist of the remaining villages in that d i s t r ic t—that is, villages without w o r k i n g p r i m a r y cooperative credi t societies.

The reason for d r a w i n g this two­fo ld sample, we read in the Tech­nical Report, was that "one of the m a i n objects of the Survey was to study the w o r k i n g of cooperative credit in r u r a l areas . . . . " ' We may recall , however, that this " m a i n object" was not set out in the terms of reference given by the Reserve Bank. As . o f 1951, the Reserve Bank knew only too wel l that the cooperative movement in I n d i a was weak and played a very m i n o r role in r u r a l credit . M a n y bodies of en­q u i r y had attested this fact in the decade before 1951 . Most recent of these was the Rura l Banking Enqui­ry Committee, the headquarters of wh ich had been in Bombay, at the Reserve Bank. The Report of the Rura l Bank ing E n q u i r y Committee, signed in M a y , 1950, commented as follows on the place of coopera­tives in r u r a l credi t : " A s yet they cover a very smal l p ropor t i on of

Technical Report, p 1. Fo r the terms of reference of the RCS, see Survey Report, V o l 1, Par t 2, p 704, and the General Report, p 3.

the ru r a l people and meet only a f rac t ion of their credi t requirements, and, except in a few regions, their w o r k i n g has not been very satisfac­tory ."† ln this judgment , the Rural Bank ing E n q u i r y Committee fol lowed closely the views expressed in the 1945 Report of the A g r i c u l ­tura l Finance Sub-Committee of the Policy Committee on Agr icu l tu re , Forestry and Fisheries, appointed by the Government of I n d i a .

By selecting hal f of the sample villages f r o m the relatively small number of vi l lages in wh ich coope­ratives were func t ion ing , the Com­mittee of Di rec t ion placed yet ano­ther serious l i m i t a t i o n on the representativeness of the RCS data. Once again, the impression is creat­ed that the Commit tee were con­cerned more w i t h their prospective policy recommendation for a vast expansion of cooperatives than w i th the actual func t ioning of credi t in the ru ra l areas at the t ime of the Survey.

T h e F i n d i n g s

I t would be gratui tous, in view of the foregoing, to w a r n that the RCS "findings"' have to be approached w i t h c i rcumspect ion. The fact that the RCS data appear in books bear­ing the Reserve Bank's monogram does not raise them, ipso facto, to the level of statistical currency of the republ ic .

The RCS " f i n d i n g " wh ich receiv­ed the greatest at tention in the newspapers and publ ic discussion pertains to the place of coopera­tives in the total ag r i cu l t u r a l credit supply " p i c t u r e " . Out of a l l credit advanced to cult ivators, the Survey Report states, cooperatives supply only 3.1 percent. By contrast, moneylenders (bo th professionals and agricul tur is ts who also do some lending) supply about 70 percent. The rest is said to come f rom "rela­tives'", f rom "traders" , f rom " land­lords" (to their tenants) , f rom Gov­ernment and f rom commercial b a n k s . ' ' " T h e utter insignificance

† Report of the Rural Banking Enquiry Committee (Government of Ind i a , M i n i s t r y of Finance, Department of Economic Affairs , New De lh i , 1953) , pp 46-47.

Survey Report. V o l I , Part 2 (Credi t Agencies) , p 2. In this chapter, details are given on (1) total debt stated to be owed to these various suppliers, and ( 2 ) total bor rowings in the past year f r o m the suppl iers .

of the volume of credi t suppl ied to the cul t iva tor by the cooperative movement" the Committee of E r e c ­t i o n wr i te , was perhaps " the most s tar t l ing revelation of the Survey . , . . " ' . (The General Report. Recom­mendations, p 8.)

SPURIOUS STATISTICAL PRECISION

Before retracing the steps by which the figure of 3.1 percent was produced, let us be clear in what respect this " f i n d i n g " could be con­sidered a surprise. Innumerable reports, books, and speeches in the years before the RCS had noted that the part of the cooperative move­ment in r u r a l credit had been very small , very minor , insignificant , etc. The new element contr ibuted by the RCS consisted in the apparent sta­t is t ical precision wi th which the share of the cooperatives as credit suppliers was expressed.

We have previously noted that no questions about amounts loaned out were put either to professional moneylenders, to traders, or to r u r a l families wh ich migh t have advanced credit to their neighbours. Thus, on the supply side, no quanti tat ive i n fo rma t ion whatsoever was collect­ed f r o m the most impor tant source' of r u r a l credit .

Instead, the credit supply p ic ture has been b u i l t up f rom replies to questions about borrowings on the demand schedules. This procedure might be expected to yield precise results i f , and only if :

( 1 ) borrowings were actually re­ported by a l l the sample fa­milies wh ich had taken loans;

(2) the amounts borrowed were correctly stated;

( 3 ) the agencies f r o m which the loans had been taken were proper ly iden t i f i ed ; and

( 4 ) the answers were accurately wr i t t en down by the RCS field workers.

Because of the sensitive nature of debt as a subject and the relentless pressure on the investigators for speed, we know that these condi­tions were not in fact f u l f i l l ed . Since no system of cross-checking was bu i l t in to the design of the de­mand schedules, and no objective ver i f ica t ion was attempted, no con­fidence can be placed in numerical values derived f rom these data.

Even if the data on total borrow­ings and the sources of these bor­rowings were of unexceptionable qual i ty , the fact remains that be­cause of the peculiar nature of the RCS sample, the 127.000 families

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f r o m which this in fo rmat ion was gathered may not constitute a pro­bab i l i ty sample of r u r a l famil ies in I n d i a . I f the 75 distr icts were not selected at random, we have no way of knowing how the facts about bor­rowings by these par t icu la r 127,000 families wou ld compare w i t h data on the borrowings of the universe o f I nd i an ru ra l families, In sum, the range of uncertainties is such thai the RCS does not provide a basis for saying whether the actual con t r ibu t ion of the cooperatives to the supply of r u r a l credit was 1 percent, 3 percent, 6 percent, or even 9 percent.

I t is therefore remarkable that the Committee of Di rec t ion permit­ted themselves to ca r ry the calcula­t i on beyond the decimal point . Of al l fresh borrowings by cu l t iva t ing famil ies , d u r i n g the year 1951-52, we are in fo rmed , 3.1 percent were f rom cooperatives. W i t h regard to their total outstanding debt (as dist inguished f r o m loans taken dur­ing the Survey year) we learn that exactly 3.7 percent of the total was owed to "cooperatives and commer­c ia l banks together". Statement of the propor t ions owed by cu l t iva t ing families to different agencies in tenths of percents w o u l d appear un­warran ted on the basis of materials in which , we are t o l d , "Separate data on debt owed to cooperatives and commercia l banks are not avail­able." ( S u r r e y Report, V o l u m e 1. Part 2, pp 2-3)

We may also note that, according to the RCS. after the professional moneylenders to whom 46.8 percent was owed, and agr icu l tur i s t money­lenders to whom 25.2 percent was owed, the t h i r d most impor tan t group, to whom 11.4 percent of al l outstanding debts was due, was "relat ives". (Surrey Report, Vo lume I , Part 2 , pp 2-3) Nowhere in the RCS materials do we f ind a defini­t ion of this category. The extent to w h i c h "rela t ives" overlapped w i t h moneylenders. traders or money-lending agricul tur is ts is unknown. Kven apart from "relat ives", con­fusion in the ident i f icat ion of lend­ers was inevitable, in view of the prevalence in many areas of per­sons whose activities encompassed both t rad ing and money lending. Since the RCS supply categories were not mutua l ly exclusive, the significance of the figures given for the' share of total debt to any one becomes dubious,

CAPITAL FOBMATION ESTIMATE

The Commit tee of D i rec t ion have also put fo rward an A l l - I n d i a esti­mate of gross capi tal fo rmat ion by ru ra l famil ies in 1951-52. In view of the "great general interest" in capital format ion , the Committee w r i t e ' they have made an exception to their '"general ru l e" against pre­senting overall total estimates for the whole count ry . For purposes of this estimate the Committee u t i l ize A l l - I n d i a averages (i e, averages of the data f r o m a l l 75 dis tr icts) of the amounts pa id out per f ami ly d u r i n g the year on account of b u i l d ­ing construction, on account of "ca­pi ta l expenditure in non-farm busi­ness'' and on account of "cap i t a l expenditure in agr icu l ture exclud­i n g land and livestock purchase". Expenditures f a l l i ng in these three categories are added up separately for cu l t i va t ing families and non-cu l t iva t ing families, then m u l t i p l i e d respectively by the estimated num­bers of one and the other type of f ami ly in r u r a l I n d i a . The total amount a r r i ved at in this fashion is Rs 650 crores. In the Survey Report the Committee make much of this f igure wh ich , they term "very h i g h " , and take as ind ica t ing that capital format ion was much higher than usually estimated. (Survey Report, Rural Families, pp 710, 720, and 728)

Mo scientific standing attaches, to this estimate of Rs 650 crores. It is put together in large part f rom data recorded in response to un­answerable questions. We have mentioned above the difficulties in­herent in the i tem on "non- fa rm business". There were also, we have noted, wide variat ions in the way the investigators understood the instructions on what to record under the head of "other capital expendi ture in agr icu l tu re" .

More impor tan t , in a country l ike India no set of data l im i t ed to ex­penditures can suffice to bu i l d up a sound estimate of capital fo rmat ion . Because of its par t ia l and discrete character, the RCS material on r u r a l families cannot be aggregated to furn ish overal l measures of this type. Despite the considerable growth of interest in capital fo rm­at ion, the RCS figure has been v i r ­tual ly ignored in serious discussion of the subject. Even subsequent Reserve Bank publicat ions wh ich refer to capi ta l format ion have left this RCS " f i n d i n g " out of consider­a t ion .

NATURE OF TABULATIONS Aside f r o m the handful of un­

reliable A l l - I n d i a estimates, the RCS " f ind ings" are brought together in the frequency dis t r ibut ions to w h i c h we have referred. F r o m these we can discover such facts as that in 114 of the 600 sample villages the average expenditure of cu l t iva t ing famil ies on purchase of livestock fell between Rs 100 and Rs 200. Since we have been warned not to infer f rom this circumstance that the average annual expendi ture of cult ivators for livestock w o u l d be f rom Rs 100 to Rs 200 in about one out of every six villages in I n d i a , the i n fo rma t ion is of decidedly l imi t ed interest.

W i t h i n the villages, the distr icts , the States and the Regions, many items of in fo rmat ion are g iven se­parately for various classes of cul t i ­vators. The average amount bor­rowed per fami ly , for example, is reported not only for a l l families and for all cu l t iva t ing famil ies but also for the " b i g cul t iva tors" , the ' l a r g e cul t iva tors" , the " m i d d l e cul ­t ivators" and the "small cul t iva tors" . These four labels s igni fy respective­ly (he first decile, the first three de­ciles, the four centre deciles and the lowest three deciles of the whole list of cu l t i va t ing families ranked by size of cul t ivated ho ld ing .

As we know, "the d iv i s ion into . . . strata | deciles | was made separate­ly for each village'', (Survey Re­port, p 823. Italics added—D.T. ) Since there were 600 villages, this means that there were 600 sets of strata. In g i v i n g averages for each of the four clases of cul t iva tors— the big . the large, the m i d d l e and the small the RCS is presenting figures for 000 disparate groupings.

DISPARATE GROUPINGS

Because the RCS has defined its "classes" in terms of fixed percent­ages, of families in each vi l lage, the terms have a different meaning in respect of each vi l lage. As soon as data for b i g cult ivators f rom one village are taken together w i t h those for b ig cult ivators i n another v i l ­lage, a heterogenous mass of f ami ­lies is gathered up into a single class. Condit ions vary so wide ly that even in ad jo in ing 'districts the smallest cul t ivated holdings in one village may. in absolute physical terms, equal or even exceed the largest cult ivated holdings in ano­ther v i l lage . To collate data refer­r ing , for example, to the upper three deciles in a vi l lage of d w a r f holders

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w i t h data collected f r o m the upper three deciles; in a vi l lage where large holdings predominate, is to cumulate i n fo rma t ion about two altogether dissimilar groups of cul ­t ivators. Yet this is exactly what has been done in numerous dis tr ic t , State and regional tables.

A s imi lar d ispar i ty characterizes the g roup ing of intensive enqui ry families in to classes according to value of gross produce. The Sur­rey Report concedes that data so presented do not lend themselves to use for analyt ic purposes ;

" l t is obvious that the compo­sit ion of classes of cu l t iva tors by value of gross produce is extreme­ly m i x e d ; each class contains various types of fanners ho ld ing relat ively very different positions in their respective fa rming econo­mies. A farmer from among the top strata in a low monetized eco­nomy and a lower strata farmer f rom a h igh ly monetized economy may both fal l in the same class of value of gross produce. In the various classes grouped according to average value of gross produce, different proport ions f rom different regions and thus w i t h different degrees of commercial i ­zation or intensity of f a rming , etc. would have been inc luded .

"lt wou ld not be possible, in the circumstances, to make any observations on expenses, receipts, debt or repayments, or any rela­tions between these factors, based on these data". (Survey Report, p 826)

Assessment At every stage of the RCS we find

a disproport ionate emphasis on those elements in the ru ra l scene which fitted in w i t h the Commit tees pre­conceptions as to the way in which the credit system should be recon­structed. Hence the focus on " f a r m business"; the preoccupation wi th cult ivated holdings at the expense of ownership hold ings ; the adoption of the adminis t ra t ive dis t r ic t as the basic uni t of the Survey; and the undue weigh t ing given, in the choice of sample villages, to villages in which cooperative societies were funct ioning. The programme wh ich the Committee of Direc t ion subse­quently recommended to the Reserve Bank envisaged a vast h ierarchy of State and dis t r ic t banks dispensing credit through vil lage cooperatives in accordance w i th the product ion needs of business-like, market-oriented farmers. Th i s was not. of

course, the way credit was actually funct ioning in r u r a l I n d i a a t the time of the Survey. The design of the enqui ry followed the lines of a vision of the future rather than those of the exis t ing structure of credit in the countryside.

Insofar as the a i m was to provide a sound factual basis for the formu­lation of long-term ru r a l credi t policy, the RCS was a fai lure. The Committee of Di rec t ion sacrificed completeness of f a m i l y coverage in order to ca r ry through a nat ionwide survey in a single year. Rut they d id not succeed in p roduc ing either valid or reliable estimates for I n d i a as a whole. Imprope r use of the survey method ensured unre l i ab i l i ty , while weakness of design led to poor representativeness.

There can be no question that an investigation of rura l credit in Ind ia

has to grapple w i t h p rofound diffi­culties. What is unfortunate is. that the Committee of Di rec t ion clut-ched at quick and shoddy solutions. From the scientific point of view the greatest need was. and st i l l is, for conceptual c l a r i t y : for an unified framework of categories and rela­tionships in terms of wh ich data may be collected, evaluated and inter­preted. On this score the Commit­tee, in extenuation of their use of inadequate indicators, plead the "want . . . o f any other easily avail­able and qu ick ly appl icable c r i te r ia of classification . . " (.Survey Re-port, p 824 see also p 65.) Haste and convenience, in effect, became the watchwords of the RCS. No wonder, that, viewed as a scientific enquiry , the Rural Credit Survey must be deemed deficient in every major respect.

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