Indebtedness among rural households of Punjab: An economic analysis

Indebtedness among the rural people in India has always been an issue of great concern for the economists and the government and this problem is increasing day by day. The analysis shows that a major segment of the rural families of Punjab is reeling beneath indebtedness. The average volume of debt for each indebted household is maximum for large farm households and the least among the ‘Other’ households. Average amount of debt among all the households is the maximum among large farm households. Marginal and large farm households owe the highest amount of debt to primary agricultural cooperative societies/co-operative banks, whereas medium and small farm households owe it to commercial banks. Agricultural and non-agricultural labour families have taken the maximum volume of loans from large farmers, whereas artisan and ‘Other’ households have borrowed the same from commercial banks. Strengthening of co-operative sector is must for providing easy agricultural loans to marginal and small farm households. New institutional mechanism should be set like self help groups, village level cooperatives and other collective networks to cover the small or marginal producers more effectively.