IMPACT OF AGRICULTURAL CREDIT ON FARM PRODUCTIVITY AND INCOME OF FARMERS IN MOUNTAINOUS AGRICULTURE IN NORTHERN PAKISTAN: A CASE STUDY OF SELECTED VILLAGES IN DISTRICT CHITRAL

Finance is considered as the basic ingredient for each and every economic activity including griculture. Especially in the economy where agriculture is subsistence this problem is very severe. Therefore the responsibility of the state is to support this sector. For this purpose the government extends institutional credit to those who can not afford to fully utilize the available technology. In our case the main source of institutional credit was Zari Taraqiati Bank Ltd (ZTBL). Aim of the present research was to study the impact of credit on farm productivity and income of the sample farmers in a backward District i.e. Chitral, of Northern Pakistan. For this purpose data were collected from both borrowers and non borrowers from selected villages in the district of Chitral during the year 2007. The findings show positive relationship between farm productivity and agricultural credit. Similar relationship was found with income of the sample farmers. This relationship could be attributed to the timely availability and application of the required inputs due to obtaining of the loan from ZTBL. However, complaint about the interest rate charged and the procedure for obtaining this credit ware also recorded. In the light of these findings it is recommended to review interest rate and further simplify the procedure for obtaining credit advanced by ZTBL