Skip to main content

Usurious moneylending prevails more in Gujarat than in other Indian states, suggests latest NSSO report

By Rajiv Shah
In a remarkable revelation, a new National Sample Survey Organization (NSSO) report, released early this month, has found that Gujarat has a higher proportion of indebted households which reported taking loan at very high interest rate – 25 per cent or more. Calculations, based on the data released by the NSSO, suggest that 64.6 per cent of the state’s indebted households took loan at such high rate – which can easily be interpreted to mean usurious moneylenders. Titled “Key Indicators of Debt and Investment in India”, the report has found that there is just one state of 21 whose indebted households may be depending so heavily on moneylenders – Jammu & Kashmir (69.3 per cent).
Based on NSSO’s 70th round, the data in the report say that there are 260 rural households in Gujarat out of every 1000 which reported outstanding cash loans. A breakup of the data suggest that there are 80 out every 1000 rural households which reported taking loan at an interest rate between 25 and 30 per cent, and another 88 out of 1000 which reported taking loan at an even higher rate of interest, i.e. 30 per cent and higher.
“This would mean that there are 168 out of every 1000 households which reported taking loan at a very rate of interest. Considering that there are in all 260 indebted households which reported outstanding loans in Gujarat, this would mean that a whopping 64.6 per cent households (168 every 1000 households) which reported taking loan at such high rate of interest!”, says an analysis based on the NSSO report.
No doubt, the NSSO report suggests that there are several other states which reported higher proportion of indebted households than Gujarat. Two states top: There are 591 households per 1000 in Telangana and 541 households per 1000 in Andhra Pradesh which reported having rural households with outstanding cash loans. Other states whose households reported a higher proportion outstanding cash loans than Gujarat are Bihar (291 households), Karnataka (464 households), Kerala (495 households), Maharashtra (313 households), Punjab (331 households), Rajasthan (374 households), Tamil Nadu (397 households), and Uttar Pradesh (296 households).
However, clearly, being indebted is one thing, and being indebted at a very high rate of interest is totally another. It is but natural for an economy in transformation -- especially the rural feudal seeking to become one with a strong capitalist agriculture based – for being dependent heavily on loan to substantially improve the economic status. Farmers would indeed need loan for necessary inputs like seeds, equipment, fertilizers, transportation, and so on.
But, it seems, the formal banking system has failed in this, one reason why a substantial percentage of indebted rural households reported taking at a rate of interest which is higher than 25 per cent.
The proportion of indebted households reporting outstanding loans at a very high rate (25 per cent or more) in Telangana and Andhra Pradesh is 30.8 per cent and 23.5 per cent, respectively, or less than half that of Gujarat. The all-India average comes to 40.1 per cent of the indebted households which reported taking loans at such high rates – households reporting outstanding cash loans were 314 out of 1000; 61 per 1000 reported taking loans at 25-30 per cent rate of interest, and 65 per 1000 reported taking loan at 30 per cent and above.
Indeed, taking loan at a very high interest rate – almost double of what the formal banking sector offers – should mean the farmer is, apparently, dependent on the informal sector for loan, especially the usurious moneylender. Basing on the NSSO report, a recent analysis on India said, “Between 2002 and 2012, the number of rural households with bank accounts more than doubled in number. Yet, rural households increased their borrowings in a significant way from private moneylenders, and not the organized financial sector.”
It added, despite a 120 per cent increase in rural households with bank accounts in the decade in question, “Indebtedness is more among poorer households, who borrow more from moneylenders and more for non-business use.” If this is true of India, it should be even truer of Gujarat.
A well known expert on the subject, an assistant professor at the Jawaharlal Nehru University, Himanshu, has been quoted as saying that the NSSO report is “a stark reminder that little has changed for farmers in the last decade. While formal credit flow has multiplied by four times in this period, small and marginal farmers have certainly not benefitted. The question is who has benefitted from this increased outflow to the agriculture sector.”
The NSSO report, prepared on the basis of the data collected in 2012-13, suggests that there were in all 76.5 per cent of the rural households in Gujarat with bank accounts, which is lower as many as nine major states of 21 – Haryana (84.3 per cent), Himachal Pradesh (95 per cent), Jammu & Kashmir (86.8 per cent), Kerala (89.8 per cent), Punjab (78.1 per cent), Rajasthan (77.3 per cent), Tamil Nadu (77.1 per cent), Uttaranchal (79.4 per cent), and Uttar Pradesh (77.9 per cent).
Even if Gujarat may have succeeded in improving upon its bank accounts under Prime Minister Narendra Modi’s Jan Dhan scheme, analysts wonder: How many of the account holders would be able to avail, if at all, loan to invest in agriculture?
---
A version of this article was first published HERE

Comments

TRENDING

Reducing emission? India among top nations whose coal as energy source going up

By NS Venkataraman*  The State of the Global Climate report by the World Meteorological Organization (WMO) confirmed that the year 2023 was the warmest year on record, with the global temperature of 1.4 degree celsius above pre-industrial 1850-1900 base line.

Lockdown 'total failure' of science more than of politics: Open letter on 4th anniversary

Counterview Desk  In an open letter to fellow academicians, scientists and medical practitioners in India, marking the fourth anniversary of India's lockdown (25 March 2024), the Managing Committee* of the Universal Health Organisation (UHO) has insisted on the need to "repair two years of immense damage to science".

Insider plot to kill Deendayal Upadhyay? What RSS pracharak Balraj Madhok said

By Shamsul Islam*  Balraj Madhok's died on May 2, 2016 ending an era of old guards of Hindutva politics. A senior RSS pracharak till his death was paid handsome tributes by the RSS leaders including PM Modi, himself a senior pracharak, for being a "stalwart leader of Jan Sangh. Balraj Madhok ji's ideological commitment was strong and clarity of thought immense. He was selflessly devoted to the nation and society. I had the good fortune of interacting with Balraj Madhok ji on many occasions". The RSS also issued a formal condolence message signed by the Supremo Mohan Bhagwat on behalf of all swayamsevaks, referring to his contribution of commitment to nation and society. He was a leading RSS pracharak on whom his organization relied for initiating prominent Hindutva projects. But today nobody in the RSS-BJP top hierarchy remembers/talks about Madhok as he was an insider chronicler of the immense degeneration which was spreading as an epidemic in the high echelons of th

Magnetic, stunning, Protima Bedi 'exposed' malice of sexual repression in society

By Harsh Thakor*  Protima Bedi was born to a baniya businessman and a Bengali mother as Protima Gupta in Delhi in 1949. Her father was a small-time trader, who was thrown out of his family for marrying a dark Bengali women. The theme of her early life was to rebel against traditional bondage. It was extraordinary how Protima underwent a metamorphosis from a conventional convent-educated girl into a freak. On October 12th was her 75th birthday; earlier this year, on August 18th it was her 25th death anniversary.

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam* RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

'Wrong direction': Paris NGO regrets MNC ArcelorMittal still using coal-based steel

By Rajiv Shah  A new report by Paris-based non-governmental research and campaigning organization, Reclaim Finance, has blamed the MNC ArcelorMittal – formed in 2006 following the takeover and merger of the western European steel maker Arcelor (Spain, France, and Luxembourg) by Indian-owned Mittal Steel – for using use “climate destructive” metallurgical coal for its projects in India.

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Attack on foreign students: Gujarat varsity's reputation, ranking at stake, say academics

Counterview Desk  Expressing anguish over the attack on international students in Gujarat University hostels, a letter claimed to have been signed by 122 current and former academics has asked the Gujarat Vice Chancellor, Dr Neerja Gupta, to provide emotional support to the attacked students and to ensure their physical safety.  

As double engine takes backseat in Odisha, BJP is pitted against 'firmly rooted' BJD

By Sudhansu R Das  BJP has got 25 years to build its party base in Odisha. After 25 years, it felt helpless and insecure to fight elections on its own strength. The party was almost crazy to have an alliance with the ruling BJD in Odisha.  Looking for alliance at the time of election shows that the party has not groomed its grassroots level workers into potential leaders.  The state BJP leaders woke up and convinced the Central leaders that they are capable of going solo; the alliance was stillborn. The question is can BJP defeat BJD which is firmly rooted in Odisha after launching piles of populist programs in the state.