Munich Personal RePEc Archive

The Indebtedness of Rural Labour in India

Borooah, Vani and Das, Smita (2008): The Indebtedness of Rural Labour in India. Published in: Journal of Quantitative Economics , Vol. 7, (2009): pp. 106-119.

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This study examines the issue of debt distress of rural labour households (agricultural and non-agricultural labour), in all the major Indian states, using data from the 61st round, pertaining to 2004-05, of the National Sample Survey (NSS). We conduct this study at various levels and using different methodological approaches. First, using a definition of “debt distress”, set out in detail in the following section, we calculate the value of debt distress for every rural labour household (RLH) in the NSS. Then we aggregate these households to rank states, districts, and social groups according to the degree of their distress. Second, using the tools of inequality analysis, we compute the degree of inequality in the distribution of distress among indebted RLH and ask how much of this inequality can be explained by the fact households (a) live in different states and (b) belong to different social groups? Third, using the tools of regression analysis, we examine the strength of the factors impinging on whether a household is a debtor household and, if it is, the strength of the factors determining whether it obtained loans from institutional sources or from money lenders and whether it took a loan for “productive” or “non-productive” purposes.

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