During the survey year (1979/80) 75 per cent of the project members had borrowed from various credit agencies while for the non-project members, the percentage was only 55. The average amounts borrowed in project groups in the hills and the Terai were Rs. 1808 and Rs. 1885 respectively, while in the non-participating group the amounts were Rs. 750 and Rs. 1156 respectively. The proportion of borrowings from institutional and private sources shows substantial differences between the project and non-project groups (Table 5.6).

Table 5.6 Nepal: Distribution of Credit Obtained under SFDP by Source

Source: Nepal Rastra Bank, An Evaluation Study of Small Farmers Development Prefects of Nepal, Kathmandu, 1982, p. 41.

Data on the purpose of borrowing also showed some differences between the project group members and the non-project members. For instance, in the case of project group 66 per cent of the borrowing was for capital expenditure followed by consumption (19 per cent) and farming (8 per cent) expenditures. The figures for the non-project group was 68 per cent for consumption, 24 per cent for capital and 8 per cent for farming expenditures. The major items in capital expenditure for the project group were purchases of livestock, poultry and development of irrigation (see Table 5.7).

Table 5.7 Rural Nepal: Average Borrowings Per Farm Family by Purpose

(Amount in Rs.)

Source: Same as for Table 5.6, p 14.

The performance of the controlled group appears to be better in terms of actual repayment of the total repayment requirement in both the hills and the Terai. This is not unexpected as public sector institutions are more lax regarding loan recovery than the private sector loans.

Table 5.8 Rural Nepal: Debts and Their Repayment

Source: Same as for Table 5.6, p. 29.