Stories in numbers: Indians’ debt increasing, highest credit uptake among urban Scheduled Castes

Stories in numbers: Indians’ debt increasing, highest credit uptake among urban Scheduled Castes

  • During the decade 2002-12, credit uptake and the resultant debt burden among Indians grew at a phenomenal pace, a comparison of National Sample Survey Office (NSSO) data from the two years shows.
  • The growth was especially fast among urban Scheduled Castes (SCs) and Scheduled Tribes (STs).
  • The NSSO, under the union government’s Ministry of Statistics and Programme Implementation, is the largest organisation carrying out socio-economic surveys in India.
  • The report of the NSSO’s 70th Round on the Household Assets and Indebtedness among social groups in India found the average Amount of Debt (AOD) per household to be Rs 1.03 lakh for rural households and Rs 3.78 lakh for urban households.
  • By comparison, according to the 59th Round report published in 2003, the AOD per household was Rs 7,539 for rural areas and Rs 11,771 for urban areas.
  • Interestingly, an increasing percentage of this growing debt is being used to meet household expenses, rather than for the creation of productive assets.
  • In 2002, Indians on average were taking credit which was roughly 2.8% of the value of assets they held.
  • The highest Debt-to-Asset Ratio (DAR) was among the urban Scheduled Caste who took debt up to 18.46% of the total value of assets that they held.
  • Growth in the Average Value of Assets (AVA) has not been commensurate with the growth in credit uptake.
  • The two surveys were not strictly comparable as the values of land and building in the later survey were recorded as per their normative values, whereas in the 59th round they were recorded “as reported by the informant”.
  • Even so, seen together, the surveys bring out some stark facts about the distribution of wealth among the various social groups in the country.
  • Increased consumption has fuelled increased borrowing. The borrowings are substantially higher in the SC community because of entitlement-driven loans where sops are provided to the community.
  • Figures suggest that community is catching up with others when it comes to consumption. However, fact that the bulk of the money is spent in meeting household expenses rather than in wealth generation is a worrying aspect.

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