Surviving Debt and Survival Debt in Times of Lockdown

This research has been made possible due to the financial support of the Agence Universitaire de la Francophonie (AUF), through the COVINDIA project, which combines food distribution to villagers and a survey of villagers’ survival tactics and strategies. For more details, see https://odriis.hypotheses.org/projects#covindia. We sincerely thank Barbara Harriss-White, Judith Heyer, Solène Morvant-Roux, and Jean-Michel Servet for their helpful comments on an earlier draft.

What are the consequences of the Covid-19 lockdown on household debt? Drawing on quantitative and qualitative data collected in rural Tamil Nadu, this paper highlights the massive risks of financial fragility. Quantitative data show a very high level of pre-Covid-19 debt, and the lockdown was accompanied by a large-scale suspension of repayments. At the same time, there was a halt to unsecured debt and an erosion of the trust that cements most transactions. Last, but not the least, the emergence of new forms of secured debt that seriously threaten household assets was observed.

The lockdown brought to light a crucial component of the Indian economy—its migrant and circulating workforce (Breman 2020; Srivastava 2020). Another aspect of the Indian economy, largely underestimated and whose consequences are dire, concerns household indebtedness. As in other emerging countries, economic growth in India over the last two decades has been built on a sharp increase in household debt. Apart from among farmers, the rise in household debt in India has never been a real source of concern. This is true among decision-makers, academics, and activists, probably because official statistics significantly underestimate the amount of household debt, and because, until now, growth prospects have suggested good repayment capacities. The current crisis reveals the fragility of household debt.