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Reading the tea leaves on financial inclusion: The Case of rural labour households

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  • S. Chandrasekhar

    (Indira Gandhi Institute of Development Research)

Abstract

Understanding the extent of financial inclusion of rural labour households is important since in the intercensal period 2001-11, the proportion of agricultural labourers in the workforce increased by 3.5 percentage points. This paper examines progress in financial inclusion using information on indebtedness of rural labour households collected by NSSO as part survey of employment and unemployment conducted in 2004-05 and 2009-10. It is estimated that 22.3 million out of the nearly 66 million rural labour households report being in debt in 2009-10. The share of formal institutions in outstanding debt of rural labour households increased from 29 percent to 37 percent while the share of money lender decreased from 44 percent to 33 percent during this period. There has been a near doubling of loans sourced from cooperative societies and a 77 percent increase in loans sourced from banks. In contrast, outstanding debt on account of borrowing from money lender increased by a meagre 1.7 percent. One does not have a ready explanation for the miniscule growth in outstanding loans from money lenders. What is promising is that the reliance on institutional sources among rural labour households without cultivable land increased from 20.6 percent to 26 percent. The aggregate picture however masks large variations across the states of India and one does not observe any structural change in geographical distribution of flow of credit and share of outstanding advances to the landless.

Suggested Citation

  • S. Chandrasekhar, 2014. "Reading the tea leaves on financial inclusion: The Case of rural labour households," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-003, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2014-003
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2014-003.pdf
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    Cited by:

    1. Kundu, Amit & DAS, SANGITA, 2021. "Accessibility of Institutional Credit among the Agricultural Labour Households and its Impact on their Livelihood," MPRA Paper 112791, University Library of Munich, Germany, revised 03 Mar 2022.

    More about this item

    Keywords

    Financial Inclusion; Rural Labour Household; Formal Credit Markets;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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