Trends and Patterns of Household Indebtedness

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Trends and Patterns of Household Indebtedness

Special Articles

Vol. 54, Issue No. 9, 02 Mar, 2019

Updated on 14 May 2019

Based on the data from the All-India Debt and Investment Surveys, a re-emergence of non-institutional credit agencies in the incidence of household indebtedness is found since the 1990s, especially in the rural areas, reflecting the inadequate social commitments of the institutional agencies due to their contemporary organisational deficiencies. The data, however, do not seem to capture the extent of urban distress in totality. Yet, given the general dearth of evidence on the status of household indebtedness over time, institutions like the Reserve Bank of India and the National Bank for Agriculture and Rural Development should revisit this information to resurrect their roles in strengthening credit delivery to the general population.

The authors acknowledge the funding from the Research and Development Fund of the NABARD for the collaborative research project titled “Household Indebtedness and Asset Holdings as per AIDIS: A Critical Exposition and Review.” This paper is extracted from the project report.

Studies on indebtedness and wealth of households, both in rural and urban areas of the country, have principally used the results of All-India Debt and Investment Surveys (AIDIS).^{1 The various correlates by which the AIDIS’ results have been reported provide ample opportunity to the research community and policymakers to dissect incidence of indebtedness (IOI) in their varied dimensions (Rajakumar et al 2018). In this paper, the authors present the trends and patterns of indebtedness of the Indian rural and urban households, based on the analysis of these longitudinal data. Data for the overall rural sector are available from 1951 onwards, and since 1961 these are disaggregated into cultivator and non-cultivator households. For the urban sector, data disaggregated by self-employed and other households, are available from 1981.}

This paper is broadly divided into three parts. The first part discusses the trends of household indebtedness; the second part provides a comparative analysis of the demand-side results with their corresponding supply-side statistics; and the third part makes a few concluding observations.