Transition in the Rural Credit Structure of West Bengal: The Case of Murshidabad District

Abstract

This article examines the interlinkages between rural credit and other agrarian structures. The research is based on primary field survey data which is classified on the basis of labor-exploitation criteria and acreage grouping. The research shows that pre-capitalist relations substantially withered away primarily due to state intervention for land and agrarian reform under the Left Front Government. It also found the operation of market mechanisms (instead of personalized relations) in the determination of informal rates of interest and an inverse association with collateral value. This is reflected in the declining value of the weighted average interest rate (WARI) with ascending class status. Furthermore, it found that the WARI without collateral is lower than the WARI with collateral, the latter being confined only to lean seasons and emergency. An incidence of high interest rate is related to low marketable collateral and vice versa.