See Eleanor (950) and Qureshi (947)

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building’ departments. There were also several other adverse factors: cooperation presupposes an environment of mutual trust, a keen desire for the common good as well as self-discipline. Lack of these

prerequisites together with widespread illiteracy posed serious drawbacks to the cooperative movement. Moreover, the movement was essentially of an official character, which accounted for two of its weaknesses, viz.

(a) much depended on the temperament of the officers concerned and their faith in the cooperative movement, as a result of which the movement was rendered unstable, and its fortunes tended to fluctuate with the arrival and departure of the officers concerned; and (b) popular participation and desire for self-advancement which are a negation of the philosophy of cooperation got an upper hand.

In addition to the aforementioned drawbacks, two external factors gave a further setback to the movement. During the Great Depression of the 1930s, there occurred large-scale defaults on loan repayments as agricultural incomes fell sharply. Thus many societies became defunct as their capital got blocked or was wiped out by the defaults. Others suffered on account of the compulsory scaling down of debts in the wake of agrarian laws designed to reduce the burden of rural debt with a view to averting large dispossession of indebted landholders who were unable to meet their debt liabilities on account of falling prices.

The second factor came to operate, particularly in the Punjab, in the aftermath of Partition. The cooperative movement in the

pre-Partition Punjab, particularly in the credit field, had been fairly successful. When Pakistan was established, the bulk of the officials and workers of the cooperative department, who belonged to the Hindu and Sikh communities, migrated to India. A great vacuum was created in the direction and management of the cooperatives. Although this vacuum was soon filled through the training of officers and personnel,

which was arranged on a high priority basis, the lost momentum could hardly be regained.

It is generally known (and has been a recurringly dismal subject of endless enquiries and reports in Pakistan) that village cooperative societies have to a large extent become 'moribund1, an epithet that

graphically visualises an image of the cooperative structure which is not only not growing, but is becoming progressively weaker and less active.

However, this has not been the case in India since Partition in 1947. Musharraf (1980) found that the relative prominence and

extraordinary performance of the cooperative societies in the Indian half of the Punjab was one of the factors that could be cited as an explanation for the greater fertiliser use and the differentials in

cropping intensity that account for the much better growth of agriculture in that part.

Cooperative Banks

Central cooperative banks developed as a part of a federal pattern in which primary societies affiliated themselves with central banks at district and lower levels. The affiliated societies deposited their surplus funds with the central banks, which could direct them to other societies whose requirement exceeded their own funds. However, in 1959 the Credit Enquiry Commission of Pakistan found that 'agriculture finance was not the primary focus of the cooperative banks' (Government of

Pakistan, 1959). Out of the total advances of 215 million Rupees (Rs) by the cooperative banks in that year, advances to the agricultural societies amounted to only Rs 28.6 million, while the remaining advances were in

the commercial sectors. Thus the banks were effectively siphoning off capital from the agricultural sector arid, to the advantage of the few influential rich who ran these banks, were investing them in the non agricultural sector. This situation continued until as late as 1976

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when cooperative banks were nationalised and subjected to drastic reform. However, until the year 1972-73 - the period of our study - the role and functions of the cooperative banks were along the lines described above.

Agricultural Development Bank of Pakistan

Since the objectives and functions of the already existing

government Agricultural Finance Corporation and the Agricultural Bank of Pakistan were in many repects identical, the Credit Enquiry Commission

recommended in 1959 their merger into a single institution. In

pursuance of this recommendation, the Agricultural Development Bank of

Pakistan was established in February 1961, by amalgamating the two institutions.

The bank provides credit to individuals as well as to corporate bodies engaged in agriculture which, according to the b a n k ’s charter,

includes crop cultivation, horticulture, fisheries, forestry, animal husbandry, poultry farming, dairy farming, bee-keeping and sericulture. Credit facilities are also provided to cottage industry in the rural areas.

Commercial Banks

The commercial banking system in Pakistan developed from an

urban base with very minor inroads to the rural sector. By 1972,

commercial banks had not taken on the role of financing agricultural production and their lendings in rural areas remained largely confined

to the processing and marketing sectors of agriculture. In early

December, 1972, the State Bank of Pakistan introduced a scheme for

’Agricultural Loans by Commercial Banks’ which took effect from

Decmeber 1, 1972. The scheme provided for advances by commercial banks

to farmers for meeting their short and medium term agricultural credit

inputs, payment of wages of hired labour, purchase of cattle, tractors and other implements, dairy farming, installation of tubewells and land improvements. The State Bank of Pakistan Act was amended to allow the State Bank to make short and medium term loans and advances to the commercial banks, as re-finance, against their loans and advances for such agricultural operations, at 2 per cent below the bank rate.

Government (Taccavi) Loans

Since the end of the nineteenth century, provincial governments have been providing loans to agriculturalists, known as Taccavi loans, which owe their origins to loans made in times of famine and distress. Subsequently, however, governments also started providing these loans to agriculturalists for development and production. Taccavi loans are provided for specific purposes under the Land Improvements Loans Act' of 1883 and the West Pakistan Agricultural Loans Act of 1958 (which replaced the Agriculturalists’ Loans Act of 1883) and are administered by the provincial revenue departments.

The Land Improvement Loans Act of 1883 provided for long term loans for the following:

1) Construction and repair of wells, tanks and other works of