Rural indebtedness : concept, correlates and consequences: a study of four tribal villages in the North Lakhimpur subdivision, Assam

Indebtedness has been acknowledged as one of the most infamous stumbling blocks in the way of rural prosperity. It is cancerous, self-perpetuating, malignant and maleficent. It abates agricultural production, abashes social psyche, aggravates inequalities in the distribution of socioeconomic opportunities and benefits, arrests social progress and misdirects social efforts. In the Indian rural context, indebtedness characterizes: (i). unproductive usage of loan, (ii). usurious ensnaring of the borrower, (iii). captivation of productive resources, (iv). exercise of coercive and exploitative economic and social powers by the lender, (v). compulsion, plight, misery and feeling of guilt and helplessness, and (vi). erosion of social status of the borrower. In this study we propose an empirical study to measure indebtedness, identify its correlates and to assess the consequences of indebtedness on the productive and distributive performance on the rural economy. We have collected primary data from four tribal villages. The selection of these villages has been made purposively. We hold the opinion that the tribal population in the rural areas of Assam has been least exposed to the credit programmes launched by the public agencies and hence a study of indebtedness provides us with a deeper insight in the problem. We have observed that in the Indian context rural indebtedness is resonant with the overtones of unproductive usage, usurious ensnaring and deplorable condition of the poor farmers and agricultural labourers. We have surveyed four tribal villages and based on the data thus collected identified some measures of indebtedness that can help us operationally in analyzing the incidence, process and impacts of rural indebtedness. These measures are per capita loan and per capita loan per agricultural asset held by the households and these measures are good representatives of the degree of indebtedness. We have analyzed the productive and distributive effects of indebtedness and found that it leads to decline in agricultural productivity, captivation of productive resources and aggravation of inequalities in the rural community. Further, our finding is that indebtedness is initiated by unproductive expenditure. This in turn captivates agricultural assets, abates productivity and reduces the repaying capacity of the borrower. Our study may suggest that in order to ameliorate the conditions of the indebted rural mass we have to motivate them to minimize conspicuous consumption, especially if the households cannot afford it without borrowing. Educational planning may help us to attain this goal of making the rural mass aware of the merits of prudence and the demerits of conspicuous consumption. Further, to stop the captivation of productive assets, institutional loan should be provided on easy terms. This objective may be attained by making the cooperative and bank loans easily available.