Impact of micro credit in alleviating poverty: An insight from rural Rawalpindi, Pakistan

Pakistan's economy is agrarian in nature and character. Agriculture sector is the main source of income for majority of population in the country. Subsistence kind of cultivation merely allows the farmers to use high quality seeds, sufficient fertilizers and improved farm implements because of non-availability of credit. Small farmers are generally characterized as having low income, less saving and low capital formation. Apparently, credit seems to be the dire need of these clusters of farming community. This research endeavour is aimed to analyze the impact of credit on the income and production level of small farmers. A very little of this kind of impact assessment exercise has been made in the past particularly in barani areas. This study was confined to Rawalpindi District. Random sampling technique was used and data were randomly collected from the two different areas of Rawalpindi District. Data analysis was performed in such a way that farmers with-credit and farmers without-credit scenarios were framed to empirically testify the hypothesis through Log Linear kind of multiple regression arrangements. Most of the farmers were fall over in the category of marginalized farmers, who had land holding less than 5 acres. Average per acre production of wheat under with credit scenario was 27 mounds per acre while per acre production of wheat for without-credit category were 23 mounds per acre. Average numbers of milk animals for with and without credit farmers were same. Average milk production of milk animals for with credit farmers were 2583 kg/annum whereas, for without credit milk production was 2670 kg/annum. It reveals that at least for small farmers, credit was not a profiting activity. But average farm income for with credit farmers from crops was Rs. 32708 while for without credit it was Rs. 30115. Average farm income from livestock for with credit was Rs. 42000 whereas for without credit it was Rs. 44385 . All respondents argued that their expenditures were increasing. Most of farmers view that their income was not decreasing. Regression results show that model is best fit for with credit farmers as compared to without credit. R2 value for wheat with credit was 0.92 as compared to without credit, which was 0.88. Similar sort of significance was found for other crops. It was concluded that the credit system should further be improved so that the full benefits could be reaped both in the crop and livestock sectors and mis-utilization of credit by farmers could be minimized. Similarly, the role of Mobile Credit Officers (MCOs) should be redefined according to the changing scenarios.