Class and Vulnerability to Debt in Rural India: A Statistical Overview*

Abstract

AbstractRural indebtedness is a major development challenge confronting India. In 2018, scores of farmers protested rising household debt, and the popular coverage of the time asserted that farmers were under crushing debt. Combining data from the All‐India Debt and Investment Survey with other sources and using a class analysis, I interrogate this “crushing debt” narrative. Rural households, depending on the socioeconomic and contextual vulnerabilities that they experience, are indebted in different ways. The rural elite borrow more loans and have higher loan amounts, while asset‐poor households are more dependent on informal credit sources and also pay higher rates of interest. Households from the wage worker class are more likely to be over‐indebted relative to others. I further find that petty commodity producers bear less debt burden and are less likely to be over‐indebted relative to other classes. These findings underscore the fact that rural indebtedness is a nuanced problem that manifests in a multitude of ways across India.