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Surviving debt, survival debt in times of lockdown

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  • Isabelle Guérin
  • Sébastien Michiels
  • Arnaud Natal
  • Christophe Jalil Nordman
  • Govindan Venkatasubramanian

Abstract

This article focuses on the consequences of the Indian lockdown in terms of debt. It is based on an ongoing study in a rural area of Tamil Nadu, South India. It draws on a long-term knowledge of this region, longitudinal quantitative household survey data on employment, debt and assets (2010-2016/17) as well as qualitative surveys conducted by telephone since the beginning of the lockdown in March 2020. Our results show: (i) the drying up of part of farm income and the bulk of off-farm income; (ii) the limited role of cash saving and cash transfers; (iii) the debt burden, since the population has faced massive debt growth over the past decade and some households are already very financially fragile; (iv) a predominance of informal finance with, however, a rise in finance; (v) a suspension of repayments, including for most informal lenders; (vi) a halt to unsecured debt and an erosion of the trust that cements most transactions; (vii) finally, the emergence of new forms of secured debt that threaten household assets. The sharp rise in debt observed over the last decade is the result of a widening of credit opportunities, partly formal but mostly informal. These have been made possible by building new relationships of trust but also of confidence in the future, based on strong economic growth that was believed to be sustainable. The lockdown highlights the fragility of these dynamics. For the poorest (mostly, but not only, Dalits), neither the state nor intra-caste or kinship solidarity are sufficient as a safety net. Impoverishment and a return to old forms of dependency seem to be the only way out.

Suggested Citation

  • Isabelle Guérin & Sébastien Michiels & Arnaud Natal & Christophe Jalil Nordman & Govindan Venkatasubramanian, 2020. "Surviving debt, survival debt in times of lockdown," Working Papers CEB 20-009, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/309493
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    References listed on IDEAS

    as
    1. Srinivasan, Sharada, 2005. "Daughters or dowries? The changing nature of dowry practices in south India," World Development, Elsevier, vol. 33(4), pages 593-615, April.
    2. Chi Huu Nguyen & Christophe J. Nordman, 2018. "Household Entrepreneurship and Social Networks: Panel Data Evidence from Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 54(4), pages 594-618, April.
    3. Isabelle Guérin & Govindan Venkatasubramanian & Santosh Kumar, 2019. "Rethinking saving : Indian ceremonial gifts as relational and reproductive saving," Post-Print ird-02112848, HAL.
    4. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2014. "Savings by and for the Poor: A Research Review and Agenda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 36-78, March.
    5. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2014. "Savings by and for the Poor: A Research Review and Agenda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 36-78, March.
    6. Jann Goedecke & Isabelle Guérin & Bert D'Espallier & Govindan Venkatasubramanian, 2018. "Why do financial inclusion policies fail in mobilizing savings from the poor? Lessons from rural south India," Development Policy Review, Overseas Development Institute, vol. 36(S1), pages 201-219, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Debt; lockdown; caste; employment; India; Trust;
    All these keywords.

    JEL classification:

    • B55 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Social Economics
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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