Determinants and impacts of indebtedness A village level study in ODISHA

Abstract

Credit is the main life stream of all activities associated with production and newlineconsumption. Rural credit plays a pivotal role in the growth and development of the rural newlineeconomy, as it promotes livelihood options through enhancing the availability of credit for its newlineproductive investment. Various financial institutions provide credit for building the socioeconomic infrastructure of the rural economy. Need for borrowing in the rural economy is newlinemore significant in a country like India with more than three-fourth of its farm households newlineowning small and marginal holdings and, a large segment is unable to meet their subsistence newlinelevel. Because of lag in income and expenditure, the rural people borrow not only to smooth newlinetheir consumption and purchase of productive assets but also to meet many other social newlineobligations. Unable to meet these expenses from their income, they are compelled to borrow newlinefrom various sources. The crisis in rural livelihood is precipitated by the combination of newlinepoverty, low income and limited non-farm income opportunities. Rural Indebtedness has newlinedeep roots in India. The huge debt burden has incapacitated the rural economy. It has long newlinebeen treated as a distress phenomenon. The ever-rising cost of cultivation, declining net newlinereturn, and absence of alternative source of employment has resulted in heavy Indebtedness newlineof farmers. newline Though the poor rural households do suffer from widespread poverty, inequality and newlineunemployment, etc., the single most important factor that oppresses and makes life miserable newlineis their Indebtedness to money lenders or landowner etc. Sometimes their hard and miserable newlinelife also led them to drinking alcohol which again led them to the moneylender. Peasants are newlineperpetually indebted and often trapped in vicious cycle of mounting debt burden. newline newline