Behind Agrarian Distress:

Interlinked Transactions as Exploitative Mechanisms

By Deepak K Mishra
Associate Professor in Economics, Centre for the Study of Regional Development,
School of Social Sciences, Jawaharlal Nehru University, New Delhi-1100067
E-mail: deepakkmishra@yahoo.co.in, deepakmishra@mail.jnu.ac.in

In recent years, there has been a growing concern regarding the impact of the new
economic regime on the farming community. Newspaper reports on farmer’s suicides
have become the most frequently encountered and visible signs of agrarian distress. A
number of micro-studies as well as the recently released Situational Assessment Survey of
Farmers by the NSSO have conclusively established the grim realities in the Indian
country-side. Agrarian distress, far from being a transitory phenomenon, has in fact its
own structural correlates. Without going in to the details of the nature, forms and degree
of distress, as captured by these empirical studies, it is important to note that credit
market imperfections have played a significant role in these narratives of agrarian
distress. Firstly, the farmer’s suicides, which, of course is not the only manifestation of
distress, have been strongly linked with indebtedness in the credit market. More often
than not, the farmers, who have taken such extreme steps, had borrowed from informal
sources at exorbitant rates. Thus, apart from the production failures and risks encountered
in the increasingly volatile output markets access to credit and terms of borrowing have
emerged as significant aspects of the agrarian crisis in India. Secondly, so far as the
regional dimensions of the crisis are concerned, the conventional notion of agrarian
distress being part of the broader landscape of underdeveloped agriculture and
backwardness, which has been shaping the thinking of economists and policy makers for
decades, no longer fits to the emerging evidences from rural India. At the risk of some
oversimplification, it is important to emphasize that the manifestations of agrarian
distress in contemporary India is not confined to the ‘pockets of backwardness’, largely
characterized by low productivity, relatively lower levels of use of ‘modern’ inputs and
low levels of commercialization of agriculture. It is significant that even the regions
having a high degree of commercial agriculture, using relatively better technology and
having a relatively diversified cropping pattern have also reported high indebtedness and
distress of various kinds. Thus, agrarian distress in rural India seems to have at least two
important dimensions, distress under backwardness and distress under
commercialization. Although Orissa, in terms of its overall agricultural performance
represents an area under backward, low productive agriculture, within the state there are
signs of low productive as well as relatively advanced agricultural systems. By focusing
upon particular aspects of the agrarian economy, this paper attempts to bring out the
underlying mechanisms, which contribute towards the making of the agrarian distress.

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More specifically, the paper reports the findings of a primary survey in there villages of
Orissa on the extent, types and determinants of market interlinkages.

Market interlinkage has been observed under diverse production organisations, in

various forms, and has often led to different and conflicting interpretations. It has been
theorized on the one hand as a mutually beneficial voluntary contract among self-interest-
maximising individuals faced with a variety of market imperfections, while on the other,
it has been interpreted as an exploitative mechanism serving the interests of surplus-
appropriating classes. Crucial to the debate on implications of market interlinkages is the
dynamics of institutional arrangements that enable these linkages and sustain them under
changing conditions of production.

In the neo-classical framework, interlinkage is typically seen as a response to

market imperfections or some other constraints faced by the economic agents. The thrust
of the neo-classical and NIE argument is that since market interlinkages emerge only in
the presence of imperfections, asymmetry of information etc., ‘interlinkage is motivated
by the desire for economic efficiency, not necessarily by the desire for further
exploitation of the worker’ [Stiglitz 1986: 256]. Contrary to the neo-classical approach to
interlinkage as a voluntary contract among free economic agents, in the Marxian
literature it is analysed with explicit reference to the unequal relations of power, rooted in
the unequal access to productive resources. The core issue that separates the Marxian and
the neo-classical schools of thought in their approaches to interlinkage is the question of
unfreedom and personalized dependence of labourers and tenants on the employers and
landlords.

II
The Study Villages

The basic objective of the study is to find the factors influencing participation of labour
and small holder households in informal credit and interlinked transactions of various
types under relatively advanced and backward agriculture. The three study villages
represent advanced, intermediate and backward production conditions in agriculture.
Village: I in Sambalpur district represents the infrastructurally well-developed irrigated
villages situated at the upper-end of the canal. Village: II located in Bargarh district is a
partially irrigated village, where farmers depend upon the nearest relatively small
township of Barpali for selling their output or purchasing their inputs. The third village,
selected from Nuapada district, which was part of Kalahandi, represents a typical
backward, poverty-stricken village with poor infrastructural facilities and a low
productive, dry land agriculture. After the selection of the villages all the households
were interviewed on the basis of structured questionnaires in order to gather information
on various aspects of agricultural operations.

III
Agrarian Relations and Informal Credit

1
 The historical transformation of production relations in the study region,
throughout the colonial period, resulted in the differentiation of the peasantry and gradual
expansion of the landless labour class (Padhi, 1999). An important aspect of this
transformation was land alienation from the tribal peasantry to the upper and middle
castes (Nath, 1998). The development of canal irrigation in Sambalpur district,
particularly after the construction of the Hirakud dam, has resulted in significant changes
in labour relations.

The study of agrarian structure in the three villages revealed that the landless,
marginal and small landowners account for around 86 per cent of all surveyed
households. The extent of landlessness was found to be higher in the irrigated belt
than in the unirrigated region. It was found that the top 6 per cent of landowners control
32.35 per cent of the cultivated area (Table: 1). The decomposition of landowning
households, according to the different caste groups, reveals a neat correspondence
between land-ownership status and caste-status – the scheduled caste and scheduled tribe
households have relatively higher share among the landless and marginal farmers while
in the larger size-classes the OBC and general categories have a higher presence1 . The
distribution of operational holdings according to various size classes shows the
preponderance of small and marginal cultivators, particularly in the dry village (Table: 2).
In both the irrigated villages, the small as well as the large farmers were found to be
leasing-in land, but in the unirrigated village, land-lease market was found to be
dominated by small and marginal farmers (Table: 3). While in the developed and well-
communicated irrigated village, fixed produce tenancy was found to be the most
important form of tenancy, followed by fixed-cash tenancy, in the intermediate ririgated
village, share tenancy, followed by fixed produce and fixed cash tenancy was found to be
the predominant form of tenancy. As a whole, while in the irrigated villages, fixed
produce tenancy emerged as the major form of land-lease contract, in the dry, backward
village, sharecropping is the main form of leasing-in. An important aspect of the land-
lease market in the unirrigated village is the relatively higher importance of usufructuary
mortgage (Table: 4).

Our filed-survey revealed that contractual relations in labour market in the two
irrigated villages broadly follow a similar pattern, but are more complex and fragmented
than those in the unirrigated, dry village2 . In the rainfed agricultural belt, represented by
the third village, Amlapali, the agricultural labour contracts are broadly of two types:
casual and permanent. Within the permanent labour contracts, two kinds of arrangements
were noticed: (i) Firstly, the halia or guti systems, which is basically an attached labour

1
In total, among the landless 41.80 per cent are ST, 32.8 are SC, 22.22 per cent are OBC and the rest
3.17 per cent belong to the general category. Among the marginal farmers, 57.36 per cent are OBC,
26.36 per cent are ST and 16.38 per cent are SC. On the other hand in the semi-medium and large
categories, OBCs followed by the general group have a relatively higher share. Taking all the
households together, the 4.50 per cent of general households own 10.32 per cent of total area, 44 per
cent of OBCs control 44 per cent of area, 23 per cent of SC own 14 per cent of land and 29 per cent
of ST household own 13 per cent of the area.
2 In a study on Sambalpur district, Nath finds that labour relations in the irrigated area are not
qualitatively different from those in the dry region (Nath, 1998), while Sarap(1991a) reports
substantial changes in the region following intensification and commercialization of agriculture.

2
contract for male adult labourers, the duration of which is usually one year: (ii) Secondly,
the attach labour contracts for young boys, called kuthia, who are employed mainly for
taking care of the cattle. Both these contracts involve an initial payment of paddy, called
baha bandha (literally meaning ‘mortgaging your arms’), and followed by payments
either in installments or in lump-sum after the harvest, along with some gifts during the
festivals. It is important to note that the incidence of permanent labour contracts has
declined substantially in the study village, not for any other reason, but for the sheer
unviability of agriculture in this drought prone region. In the casual labour category,
gender differences in terms of wages as well as task-specific preference for male or
female labour were also noticed. Another important feature of the casual labour market
was that, though contractually independent, some casual labourers work for the same
employers quite often, a type of contract that we have termed as repetitive casual labour
contract. The labour relations in the dry region has to be understood in the backdrop of
relative stagnation in agricultural production, substantial degradation of forests and other
CPRs, frequent droughts and food insecurity, particularly for the poor and the
marginalized groups (Nayak and Mahajan, 1991; Mishra and Rao, 1992; Rao, 1995;
Mishra, 1996; Mishra, 2001; Sarap and Mahamalik, 2003). In recent years migration to
urban areas of Orissa and neighbouring states, particularly for short-duration, seasonal
migration, has also been affecting labour contracts in the study village.

Some features of the labour market in the irrigated belt are similar to that in the
dry region. The payments to permanent labour, however, unlike in the dry villages, more
often than not, are made in cash, mostly in monthly installments. The extent of permanent
labour was noticed to be higher in the relatively less developed irrigated village than in
the irrigated developed village. Among the casual labourers two types of arrangements
were noticed – time-rate and piece-rate. Some of the time-rated casual workers were also
found to be under repetitive casual labour contract. The casual labour market was also
found to be segmented in terms of gender, particularly in the second irrigated village. The
migrant labour from the neighbouring districts of Balangir, Kalahandi and the bordering
state of Chhatishgarh generally work under piece-rate contract. Women and children in
the age group 12-15 form a significant part of the migrant labour groups. A
comparatively recent phenomenon is the formation of labour groups by the local labour,
particularly the youths, who also work under piece-rate contracts. The contractual
arrangements with the migrant labour were also found to be of three types, viz. those
negotiated by the employer himself, who sometimes travels to the villages of the migrant
labourers before the peak season; those negotiated through an agent, who more often than
not, acts as the group leader and thirdly, supplementary contracts with a group of
labourers who have already finished their work. Usually small and marginal farmers in
the irrigated area enter into the third type of contract with the migrant labourers, after
they finish the work in the field of large farmers, partly as an attempt to reduce the
transaction costs. All these different forms of labour contracts have certain implications
for interlinked transactions, particularly because often the contracts are cemented through
provision of credit at low or zero rate of interest. While the in-migration of labourers
from neighbouring drought prone area and the resultant competition among the resident
and migrant labourers have strengthened the bargaining position of the cultivators,
the high labour demand in the irrigated belt, particularly during the peak season, has

3
forced them to design a variety of labour arrangements including incentive payments,
provision for house-sites and tiny pieces of land for farm servants and permanent
labourers, recruitment of group leaders, among the migrants, as monitoring agents,
besides providing cheap credit.

An investigation into the structure of credit market revealed that participation

level in the credit market is very high in the study region (Table: 5). So far as the sources
of borrowing are concerned, it was found that an overwhelming majority of the
borrowing households resort to borrowing from informal sources. The data shows a
relatively higher participation of the poor and the marginalised sections of peasantry in
the informal credit market. It is important to mention here that a sizeable percentage of
large farmers also borrow from the informal sources, particularly in the irrigated villages.
In terms of distribution of volume of credits, it is found that access to formal credit is
typically low for the landless labourers and small farmers. So far as the purpose of credit
is concerned, it is found that the landless labourers and the marginal farmers borrowed
mainly for consumption purposes while large size classes of farmers borrow mainly for
production purposes3 .

It was observed that for the landless labourers and the marginal farmers,
moneylenders and shopkeepers are the two most important sources of borrowing, while
for the small and semi-medium farmers, traders and moneylenders are the most important
sources. For large and medium farmers, traders are the most important source of informal
credit. The structure of informal credit market in the rainfed village was found to be
somewhat different from that of the irrigated villages in the sense that traders play a far
less important role in the former (Table: 6). An important dimension of the informal
credit market is that the average size of borrowing from different sources follows a
particular pattern: shopkeepers have generally advanced lower size of credit, even within
the same farm-size category. On the other hand, there seems to be some flexibility in the
average size of loan advanced by moneylenders. This points out towards a fragmentation
of the informal credit market with different class of lenders advancing loans for
particular needs and particular group of farmers4 .

IV
Interlinked Transactions: Efficient Institutional Arrangements or Interlocked
Modes of Surplus Extraction?

So far as the relative importance of different types of interlinked transactions is

concerned, it is found that, on the whole, labour-credit interlinkage is the most important
form of interlinkage followed by output and input-output credit interlinkages. Both in the
irrigated and unirrigated villages, labour-credit interlinkage is found to be the most
important form, but in the irrigated region, output-credit and output-input-credit are the

3
While the percentage of consumption credit to total credit was as high as 90.44 per cent for the
landless, 78.57 for marginal farmers, the share of production loan in total volume of credit taken was
71.13, 99.75 and 92.04 for semi-medium, medium and large categories of farmers respectively.
4
The average size of credit advanced by moneylenders, traders and shopkeepers were found to be Rs
2940, Rs 4722 and Rs 653 respectively.

4
next two important forms, while in the dry village, those positions are occupied by land-
labour-credit and output-credit interlinkages, respectively. Thus, land-labour-credit
interlinkage comes out as a feature of backward agriculture while in the developed,
irrigated belt; output market has come to play an important role in the interlinked
transactions. In both categories of areas, labour-credit interlinkage has a substantial
presence. The farm size-wise participation in different types of interlinkages revealed that
while semi-medium, medium and large categories of households participate mainly in the
input-output-credit and output-credit interlinkages, marginal and small farmers enter
into all types of interlinkages.
In order to find out the determinants of household participation in the interlinked
transactions, four different logit regressions were estimated5 . The binary logit regression
model for all farm households revealed that the size of operational holdings, percentage
of non-agricultural income in total income and years of schooling of the head of the
household, are negatively associated with the possibility of the farm household entering
into an interlinked contract, while per capita debt at the beginning of the year, debt-asset
ratio, percentage of irrigated land in total operational holding and scheduled caste or
scheduled tribe status of the household, increases their probability of entering into
interlinked contracts.

In the case of small farm households, it was found that the size of operational
holdings, per capita debt in the beginning of the year, debt-asset ratio, SC/ST status and
percentage of irrigated area in operational holdings, are all positively associated with the
probability of a small farm entering into the linked contracts, while educational level of
the household head, per capita farm output, proportion of non-agricultural income in total
income, are negatively associated with the interlinkage process.

For labour households the possibility of entering into an interlinked transaction

increases with debt asset ratio, SC/ST status and decreases with access to non-
agricultural wage income. When we consider all the sample households, it is found that
years of schooling of the head of the household, value of non-agricultural income
generating assets, percentage of non-farm earning in total income, and per capita farm
output are all negatively associated with the probability of the household entering into
any interlinked contract, while per capita debt at the beginning of the year, debt-asset
ratio and SC/ST status increase the probability of interlinkage. Thus, by and large, the
regression results suggest that households having lower levels of asset and income
diversification, lower levels of schooling, higher levels of debt burden and lower socio-
economic status have higher probability of entering into such interlinked contracts.

To understand the implications of interlinked contracts, we have analysed the

differences in the mean rate of interest, the average price at which output was sold and
the mean male wage rate among the linked as contrast to the non-linked households. It
was found that the mean rate of interest in interlinked transactions is higher than that in
the non-linked transactions, within the informal credit market. The gap between rates
of interest in the linked and the non-linked contracts is the highest in the dry, unirrigated
village followed by the irrigated, intermediate village. However, the importance of
5
For details see Mishra (2006).

5
local specificities in determining the implications of interlinkages becomes clear in the
case of irrigated, developed village where the mean rates of interest in the linked
transactions were found to be lower than that in the non-linked transactions. This might
be so because of the labour-shortage and relatively easy access of labour households to
non-farm employment, on the one hand, which enables them to get cheap credit from
their employers and the competition among traders in the output market to advance credit
to relatively larger farmers, on the other. Another important finding is that among all
farm sizes, the marginal farmers have paid the highest average rate of interest within the
linked transactions. An analysis of the distribution of linked and non-linked credit
contracts, across different ranges of interest rates, points out that even within the non-
institutional credit market, interlinked credit transactions carry higher interest
rates.

Another important finding of the study is that not only the SC and ST
households participate, to a relatively higher extent, in the interlinked transactions, but
also that when they have done so, the scheduled caste households followed by the
scheduled tribe households pay a relatively higher rate of interest, even within the
interlinked transactions.

It was also found that, on an average, the linked borrowers have to sell their
output at a lower price than do their non-linked counterparts. The price difference,
however, is highest in the dry village and lowest in the developed, irrigated village.
Even within the linked contracts, marginal, small and semi-medium categories of farmers
have received lower price for their output than medium and large farmers. Similarly, it
was found that in all the villages, agricultural labourers entering into interlinked
transactions, on an average, receive lower wages than those who have not done so.

These findings clearly bring out an important limitation of many oft-repeated

arguments on interlinkage. Whether interlinked contracts are exploitative or not is a
question that has been widely discussed in general terms. However, our study reveals
that, to a great extent, the specific socio-economic position of the household, along with
the functioning of markets, opportunities for alternative sources of earnings and levels of
productivity determine the outcome. Interlinkage, as an institutional arrangement, far
from being static and a feature of backward agriculture alone, was found to be more
widely prevalent in the high-risk, high-productivity irrigated belt. With the
transformation of production conditions, the forms of interlinkage have also changed.
While the role of land lease in interlinked credit transactions has declined, the output
market has increasingly come to play a prominent role in interlinked transactions.

V
Looking Ahead: What is to be done?

The most vital factor forcing the households to enter into exploitative interlinked
transactions is the non-availability or inadequate availability of institutional credit. With
the increasing integration of agriculture to the global dynamics of commodity production,
and the spread of new technologies to new areas, the credit need of the farm sector has

6
grown manifold. However, with the current emphasis on the commercial viability of the
banking sector and reduction in subsidies of various kinds, farm households are left with
little option but to rely on the informal sources of credit. Credit from informal sources, as
our data clearly show, is not only costlier, in many cases such credit transactions are
accompanied by undervaluation of the collateral offered, which acts as an additional
mechanism of exploitation. The most reliable measure to reduce the dependence on such
exploitative interlinked transactions is to enlarge the accessibility of formal credit in rural
areas. This calls for a targeted and sector-specific expansion of formal credit, mainly
through strengthening the rural banking system, but also through innovative group-
lending schemes. While micro-credit may solve, to some extent, the problems of the
landless labour households, given the size of the loan required by farm households, even
to meet the seasonal credit needs, enhancement of institutional credit allocations to rural
areas in general and to the agricultural sector in particular, has to be given due emphasis.

Another dimension that needs urgent attention is the expansion of the resource
base of the poor and the marginalised groups. Two distinct but interrelated strands of
policy initiatives emerge from the study: firstly, the strengthening of the human resource-
base at the household level, particularly through expanding access to education, will help
in reducing the vulnerability of the households, in a context where access to information
is increasingly becoming costly and crucial; secondly, the expansion of rural non-farm
economy will go a long way in reducing dependency on interlinked transactions, through
diversification of assets and earnings of the households. The spread of formal education,
apart from its well-known positive externalities, will help in reducing the exploitative
forms of interlinkage, primarily because, information asymmetry as well as inadequate
availability of reliable and relevant information limit the range of feasible options before
the households, which in turn, forces them to opt for such linked contracts. In all
likelihood, access to education will reduce the transaction costs in the formal credit
market as well. A long-term impact of increasing access to education will be the
expansion of alternative sources of earnings and employment for the rural households,
which also will help in reducing their reliance on interlinked transactions.

So far as the expansion of the rural non-farm economy is concerned, two broad
patterns of interventions can be envisaged. One set of policy measures are the
employment generation programmes, which not only help in reducing vulnerability of the
labour households by providing an important source of additional income, particularly
during the lean season, but also raise wage in the agricultural labour market. Another way
to generate alternative sources of earnings, not only among the farm households, but also
among the landless labour households, is the promotion of self-employment
opportunities. A range of such activities, including some in the non-farm sector, can be
identified depending on local specificities. To the extent that such income diversification
strategies provide a dependable and durable source of earning, it will help the rural
households in reducing their dependency on exploitative credit transactions, but an
equally important outcome will be their better bargaining strength in the informal credit
market, primarily because of their enhanced credit worthiness.

7
 The importance of raising farm income through increasing the levels of
productivity in agriculture can hardly be overstressed. Agricultural growth, through its
various linkage effects plays a leading role in transforming the rural economy. However,
given the higher credit requirements in agriculturally advanced regions, there is a need to
provide a range of complementary financial services to make agricultural growth more
diversified and participatory. Finally, the role of rural infrastructure in ensuring fair
product prices needs to be emphasized. It is the availability of irrigation, which is the key
to the transformation of agriculture in developed irrigated area, but the differences
between the two study villages within the irrigated belt are almost entirely because of
differences in levels of connectivity. Any policy-intervention that increases the portfolio
of income and assets of the rural households, particularly of those belonging to the poor
and the marginalized sections, and expands the range of feasible choices in input and
output markets, will act as a deterrent to interlinked transactions.

Although lack of access to cheap, not just in terms of interest rates but also in
terms of transaction and other costs of getting credit, dependable and timely credit has
acted as a major catalyst of the current agrarian crisis faced by an overwhelmingly large
section of the farmers in India, it is important to note that the factors which has generated
and sustained distress of such magnitude are, at least partly, structural and it requires
more than cosmetic and one-time ‘miracle packages’ to address these issues. Consider,
for example the following data from the NSSO survey: At the all India level, the most
important source of information regarding ‘modern agricultural technology’ is ‘other
progressive farmers’ followed by the ‘input dealer’. In Andhra Pradesh, where 66 percent
of indebted farmers have borrowed either from a moneylender or a trader, as high as 30
per cent of farmers depend on the input-dealer for such information. The inherent
information asymmetry that characterizes such a situation plays a role in forcing the
farmers to enter into exploitative interlinked transactions. The collapse of extension
services in agriculture will have long-term negative consequences for productivity growth
in Indian agriculture. Interventions to address the agrarian distress, in the minimum, need
to be based on a two-prong strategy: one, a fire-fighting approach to stop the situation
from deteriorating further; and a long-term strategy to find durable and equitable
solutions to the fundamental problems facing the Indian farmer in the context of
globalization.

8
 Table: 1 Size Class Wise Distribution of Ownership Holdings in the Study Villages

Size-Classes of Village:I Village:II Village:III All

Ownership H A H A H A H A
Holdings
(in acres)
Landless 103 0 56 0 30 0 189 0
(61.68) (0) (43.75) (0) (17.44) (0) (40.47) (0)

(0.01-2.0) 17 16.17 15 20.2 97 126.73 129 163.1

Marginal (10.18) (4.35) (11.72) (5.90) (56.40) (40.27) (27.62) (15.86)

(2.01-5.0) 16 61.3 29 100.75 39 126.6 84 288.65

Small (9.58) (16.51) (22.66) (29.44) (22.67) (40.33) (17.99) (28.08)

(5.01-8.0) 15 100.3 20 130.11 02 13.35 37 243.76

Semi-Medium (8.98) (27.01) (15.63) (38.03) (1.16) (4.24) (7.92) (23.71)
(8.01-12.0) 9 88.5 5 48.4 02 18 16 154.9
Medium (5.39) (23.84) (3.91) (14.15) (1.16) (5.72) (3.43) (15.07)

(12.01& above) 7 105 3 42.7 02 30 12 177.7

Large (4.19) (28.28) (3.34) (12.48) (1.16) (9.54) (2.57) (17.28)

All Sizes 167 371.27 128 342.6 172 314.68 467 1028.11
(100) (100) (100) (100) (100) (100) (100) (100)

Source: Field Survey

Note: (i) H = Households, A = Area owned in acres;
(ii) Figures within brackets refer to percentage to respective village totals.

9
 Table: 2 Size Class Wise Distribution of Operational Holdings

Size-class of Village:I Village:II Village:III All

Operational H A H A H A H A
holdings (in
acres)
HH not 102 0 57 0 32 0 191 0
Operating any (61.08) (0) (44.53) (0) (18.60) (0) (40.90) (0)
land
(0.01-2.0) 17 16.57 14 17.7 96 125.38 127 159.65
Marginal (10.18) (3.72) (10.94) (4.99) (55.82) (40.25) (27.20) (14.36)

(2.01-5.0) 15 58.6 29 108.65 37 118.1 81 285.35

Small (8.98) (13.15) (22.66) (30.63) (21.52) (37.92) (17.34) (25.66)

(5.01-8.0) 11 73.7 18 111.67 3 18 32 203.37

Semi-Medium (6.59) (16.54) (14.06) (31.48) (1.74) (5.78) (6.85) (18.29)

(8.01-12.0) 11 106.3 7 66 2 18 20 190.3

Medium (6.59) (23.85) (5.47) (18.61) (1.16) (5.78) (4.28) (17.11)

(12.01&above) 11 190.5 3 50.7 2 32 16 273.2

Large (6.59) (42.74) (2.34) (14.29) (1.16) (10.27) (3.43) (24.58)

All sizes 167 445.67 128 354.72 172 311.48 467 1111.87
(100) (100) (100) (100) (100) (100) (100) (100)

Source: Field Survey

Note: (i) H = Households, A = Area owned in acres;
(ii) Figures within brackets refer to percentage to respective village totals.

10
 Table: 3 Size Class Wise Distribution of Households Leasing in and Area Leased-in

Size-class of Village:I Village:II Village:III All

Operational H A H A H A H A
holdings (in
acres)
(0.01-2.0) 8 7.20 1 0.50 4 3.00 13 10.70
Marginal (25.0) (6.46) (5.0) (1.19) (26.67) (21.43) (19.40) (6.40)
[47.06] [43.45] [7.14] [2.82] [4.17] [2.39] [10.24] [6.70]

(20.1-5.0) 6 9.70 11 18.90 8 5.00 25 33.60

Small (18.75) (8.71) (55.0) (45.11) (53.33) (35.71) (37.31) (20.08)
[40.00] [16.55] [37.93] [17.39] [21.62] [4.23] [30.86] [11.77]

(5.01-8.0) 4 13.50 3 6.00 2 4.00 9 23.50

Semi-Med. (12.5) (12.12) (15.0) (14.32) (13.33) (28.57) (13.43) (14.05)
[26.67] [18.32] [16.67] [5.37] [66.67] [22.22] [28.12] [11.55]

(8.01-12.0) 7 29.00 3 6.50 0 0.00 10 64.00

Medium (21.87) (26.03) (15.0) (15.51) (0.0) (0.0) (14.93) (38.25)
[63.64] [27.28] [42.86] [9.85] [0.00] [0.00] [62.5] [23.43]

(12.01& above) 7 52.00 2 10.00 1 2.00 10 64.00

Large (21.87) (46.68) (10.0) (23.87) (6.67) (14.29) (14.93) (38.25)
[63.64] [27.30] [66.67] [19.72] [50.00] [6.25] [62.5] [23.43]

All sizes 32 111.40 20 41.90 15 14.00 67 167.30

(100) (100) (100) (100) (100) (100) (100) (100)
[49.23] [25.00] [28.17] [11.81] [10.71] [4.49] [24.27] [15.05]

Source: Field Survey

11
Note: (i) H = Households, A = Area operated in acres;
(ii) Figures within brackets refer to percentage to respective village totals
(iii) Figures within square brackets refer to percentage of households leasing-in to total farm
households, exc luding the non-operating households.

Table: 4 Forms of Tenancy in the Study Villages

Villages Percentage of households and area leased-in under
Share Fixed Produce Fixed Cash Usufructuary Other terms
Cropping Mortgage
H A H A H A H A H A
Village: I 6.25 11.67 78.12 68.58 15.63 19.75 0 0 0 0
Village: II 55.00 47.73 30.0 44.15 10.0 6.92 0 0 5.0 1.19
Village: III 66.67 78.57 13.33 7.14 0 0 20.0 14.29 0 0
All 34.33 26.30 49.25 57.32 10.48 14.85 4.48 1.19 1.49 0.30
Villages
Source: Field Survey

Table 5: Participation in the Credit Market by Source of Credit

Category of Percentage of Percentage of Borrower Percentage of Loan

Holdings Households Households borrowing from raised from
Borrowing Formal Informal Formal Informal
Sources Sources Sources Sources
Village: I
Landless 42.20 2.44 97.56 10.75 89.25
(0.98) (39.22)
Marginal 47.06 0 100 0.0 100.00
(0) (47.06)
Small 53.33 37.5 62.5 22.21 77.79
(20.0) (33.33)
Semi-Med 36.36 25.0 75.0 29.38 70.62
(9.09) (27.27)
Medium 36.36 50.0 50.0 49.15 50.85
(18.18) (18.18)
Large 72.73 50.00 50.00 54.89 45.11
(36.36) (36.36)
All Households 43.71 15.07 84.93 38.72 61.28
(6.59) (37.13)
Village: II

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Landless 71.93 2.44 97.56 1.27 98.73
(1.75) (70.18)
Marginal 92.86 15.39 84.61 45.84 54.16
(14.29) (78.57)
Small 96.55 10.71 89.29 31.13 68.87
(10.34) (86.21)
Semi-Med 100.0 22.22 77.78 44.44 55.55
(22.22) (77.78)
Medium 100.00 71.43 28.57 87.91 12.09
(71.43) (28.57)
Large 100.00 66.67 33.33 80.47 19.53
(66.67) (33.33)
All Households 85.94 15.45 84.55 45.69 54.31
(13.28) (72.66)

Village: III
Landless 37.5 0 100.0 0 100.00
(0) (37.5)
Marginal 52.08 4.0 96.0 2.11 97.89
(2.08) (50.0)
Small 43.24 6.25 93.75 4.12 95.88
(2.70) (40.54)
Semi-Med 33.33 0 100.00 0 100.00
(0) (33.33)
Medium 50.0 0 100.0 0 100
(0) (50.0)
Large 0 0 0 0 0
(0) (0)
All Households 46.51 3.75 96.25 2.26 97.74
(1.74) (44.77)
All Villages
Landless 49.22 2.13 97.87 4.89 95.11
(1.05) (48.17)
Marginal 55.91 5.63 94.37 12.56 87.44
(3.15) (52.76)
Small 64.20 13.46 86.54 23.41 76.59
(8.64) (55.56)
Semi-Med 71.87 21.74 78.26 38.78 61.22
(15.63) (56.25)
Medium 60.00 58.33 41.67 64.41 35.59
(35.0) (25.0)
Large 68.75 54.55 45.45 57.50 42.50
(37.50) (31.25)
All Households 56.32 11.79 88.21 36.87 63.13
(6.64) (49.68)
Source: Field Survey
Note: Figures within brackets refer to percentage to total households in the respective farm sizes

13
 Table 6: Sources of Informal Borrowing

Farm Size Percentage of Informal Borrowers Borrowing from

Moneylenders i Traders ii Shopkeepers iii Friends & Total
Relatives
Village: I
Landless 52.50 0 45.00 2.50 100
(51.22) (0) (43.90) (2.44) (97.56)
Marginal 62.50 25.00 12.50 0 100
(62.50) (25.00) (12.50) (0) (100)
Small 60.00 40.00 0 0 100
(37.50) (25.00) (0) (0) (62.50)
Semi-Med 33.33 66.67 0 0 100
(25.00) (50.00) (0) (0) (75.00)
Medium 0 100 0 0 100
(0) (50.00) (0) (0) (50.00)
Large 50.00 50 0 0 100
(25.00) (25.00) (0) (0) (50.00)
All 51.61 16.13 30.65 1.61 100
Households (43.84) (13.70) (26.03) (1.37) (84.93)
Village: II
Landless 70.00 0 30.00 0 100
(68.29) (0) (29.27) (0) (97.56)
Marginal 45.45 45.45 9.1 0 100
(38.46) (38.46) (7.69) (0) (84.61)
Small 12 76 12 0 100
(10.71) (67.86) (10.71) (0) (89.29)
Semi-Med 21.43 71.43 0 7.14 100
(16.67) (55.55) (0) (5.56) (77.78)
Medium 0 100 0 0 100
(0) (28.57) (0) (0) (28.57)
Large 0 100 0 0 100
(0) (33.33) (0) (0) (33.33)
All 41.94 39.79 17.20 1.08 100
Households (35.45) (33.64) (14.55) (0.91) (84.55)
Village: III
Landless 66.67 0 16.67 16.67 100
(66.67) (0) (16.67) (16.67) (100)
Marginal 62.50 12.50 25.00 0 100
(60.00) (12.00) (24.00) (0) (96.00)
Small 60 6.67 33.33 0 100

14
 (56.25) (6.25) (31.25) (0) (93.75)
Semi-Med 100 0 0 0 100
(100) (0) (0) (0) (100)
Medium 0 0 0 100 100
(0) (0) (0) (100) (100)
Large 0 0 0 0 0
(0) (0) (0) (0) (0)
All 62.34 9.09 24.67 3.90 100
Households (60.00) (8.75) (23.75) (3.75) (96.25)
All Villages
Landless 61.96 0 34.78 3.26 100
(60.64) (0) (34.04) (3.19) (97.87)
Marginal 59.7 19.4 20.9 0 100
(56.34) (18.31) (19.72) (0) (94.37)
Small 33.33 48.89 17.78 0 100
(28.85) (42.31) (15.38) (0) (86.54)
Semi-Med 27.78 66.67 0 5.56 100
(21.74) (52.17) (0) (4.35) (78.26)
Medium 0 80.00 0 20.00 100
(0) (33.33) (0) (8.33) (41.67)
Large 40.00 60.00 0 0 100
(18.18) (27.27) (0) (0) (45.45)
All 51.29 23.28 23.28 2.16 100
Households (45.25) (20.53) (20.53) (1.90) (88.21)

Source: Field Survey

Notes:
(i) Moneylenders include landlords and employers providing credit to tenants and
labourers respectively.
(ii) Traders include grain market traders, commission agents purchasing paddy and input
suppliers.
(iii) Shopkeepers refer mainly to village grocery shop owners providing items for daily
consumption.
(iv) Figures within brackets refer to percentages to total borrowers in the respective size-
classes.

Table 7: Size Class wise Participation in Interlinked Transactions

Farm Size Percentage of Households involved in Interlinked Transactions

Village:I Village:II Village:III Irrigated All Villages
Villages
Landless 19.81 50.88 21.88 30.82 29.32
(50.0) (72.5) (58.33) (61.25) (60.87)
Marginal 29.41 71.43 33.33 48.39 37.01
(62.5) (90.91) (66.66) (78.95) (70.15)
Small 26.66 65.52 24.32 52.27 39.51
(80.0) (76.0) (60.0) (76.67) (71.11)
Semi-Med 36.36 55.55 33.33 41.38 40.63
(66.66) (71.43) (100.0) (70.59) (72.22)

15
Medium 18.18 28.57 0 22.22 20.00
(100) (40.0) (0) (100) (80.00)
Large 18.18 33.33 0 21.43 18.75
(50) (50.0) (0) (26.66) (60.00)
AllHouseholds 20.96 55.47 28.49 35.93 33.19
(56.45) (76.34) (63.64) (68.39) (66.82)
Source: Field Survey
Note: Figures in brackets refer to percentage of informal borrowers who have entered into interlinked transactions.

Table 8: Caste Group Wise Participation of Households in Interlinked Transactions:

All Villages
Sl. Characteristics General OBC SC ST All
No.
1 Percentage of Total Households involved in 0.65 35.48 30.97 32.90 100
Interlinked Transactions
2 Interlinked Households as percentage of 33.33 64.71 72.73 65.38 66.81
Total Households in the group borrowing
from Informal Sources
3 Interlinked Households as percentage of 10.0 52.38 70.59 63.75 58.94
Total Borrower Households in the group
4 Interlinked Households as percentage of 4.76 27.23 44.04 37.78 33.19
Total Households in the group
5 Informal borrowers as percentage of Total 30.0 80.95 97.06 97.5 88.21
Borrowers in the group
6 Informal borrowers as percentage of Total 14.29 42.08 60.55 57.78 49.68
Households in the group
7 Caste wise distribution of all Households 4.50 43.25 23.34 28.91 100
Source: Field Survey

16
 Table 9: Types of Interlinked Contracts
Size Class Types of Interlinked Contracts
of Operational Land- Labour- Output- Input- Input- All
Holding Labour- Credit Credit Credit Output-
Credit Credit
Village: I
Landless 0 20 0 0 0 20
(0) (100) (0) (0) (0) (100)
Marginal 3 2 1 3 2 11
(27.27) (18.18) (9.09) (27.27) (18.18) (100)
Small 1 0 2 1 1 5
(20.0) (0) (40.0) (20.0) (20.0) (100)
Semi-Med 0 0 0 0 2 2
(0) (0) (0) (0) (100) (100)
Medium 0 0 0 1 2 3
(0) (0) (0) (33.33) (66.67) (100)
Large 0 0 1 0 1 2
(0) (0) (50.0) (0) (50.0) (100)
All Households 4 22 4 5 8 43
(9.30) (51.16) (9.30) (11.63) (18.61) (100)
Village: II
Landless 0 28 0 0 0 28
(0) (100) (0) (0) (0) (100)
Marginal 1 4 3 0 5 13
(7.69) (30.77) (23.08) (0) (38.46) (100)
Small 2 0 9 3 10 24
(8.33) (0) (37.5) (12.5) (41.67) (100)
Semi-Med 0 0 8 0 3 11
(0) (0) (72.73) (0) (27.27) (100)
Medium 0 0 2 0 0 2
(0) (0) (100) (0) (0) (100)
[0] [0] [8.70] [0] [0] [2.52]
Large 0 0 1 0 0 1

17
 (0) (0) (100) (0) (0) (100)
All Households 3 32 23 3 18 79
(3.80) (40.51) (29.11) (3.80) (22.78) (100)
Village: III
Landless 0 7 0 0 0 7
(0) (100) (0) (0) (0) (100)
Marginal 9 18 5 0 0 32
(28.12) (56.25) (15.62) (0) (0) (100)
Small 5 2 1 1 0 9
(55.55) (22.22) (11.11) (11.11) (0) (100)
Semi-Med 0 0 1 0 0 1
(0) (0) (100) (0) (0) (100)
Medium 0 0 0 0 0 0
(0) (0) (0) (0) (0) (0)
Large 0 0 0 0 0 0
(0) (0) (0) (0) (0) (0)
All Households 14 27 7 1 0 49
(28.57) (55.10) (14.29) (2.04) (0) (100)
All Villages
Landless 0 55 0 0 0 55
(0) (100) (0) (0) (0) (100)
Marginal 13 24 9 3 7 56
(23.21) (42.86) (16.07) (5.36) (12.5) (100)
Small 8 2 12 5 11 38
(21.05) (5.26) (31.58) (13.16) (28.95) (100)
Semi-Med 0 0 9 0 5 14
(0) (0) (64.29) (0) (35.71) (100)
Medium 0 0 2 1 2 5
(0) (0) (40) (20) (40) (100)
Large 0 0 2 0 1 3
(0) (0) (66.67) (0) (33.33) (100)
All Households 21 81 34 9 26 17
(12.28) (47.37) (19.88) (5.26) (15.20) (100)
Source: Field Survey
Note:
(i) This table refers to the different types of interlinked contracts. Since some
households have entered into more than one interlinked contracts, the total
number of interlinked contracts is higher than the total number of linked
households presented in Tables 7 and 8.
(ii) Figures within parenthesis refer to percentages to row totals.

18
Notes:

[The author is deeply grateful to Profs. G.K. Chadha. G.S.Bhalla, Ravi S. Srivastav,
P.M.Kulkarni, R.S.Rao and H.S. Shergill for their comments on earlier drafts of the
paper. Thanks are also due to Partha Pratim Sahu and Niranjan Sarangi for their
generous help. An earlier version of the article was presented in a seminar on ‘Agrarian
Transformation in Orissa’ at Sambalpur University. The usual disclaimers apply.]

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