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

132 Gujarat citizens, including IIM-A faculty, others declare solidarity with Kashmiris

Counterview Desk
A week after it was floated, 132 activists, academics, students, artists and other concerned citizens of Gujarat, backed by 118 living in different parts of India and the world, have signed a "solidarity letter" supporting the people of Jammu and Kashmir (J&K), who, it claims, have been silenced and held captive in their own land. The signatories include faculty members and scholars of the prestigious Indian Institute of Management-Ahmedabad (IIM-A).

Bharat Ratna nominee ‘joined hands’ with British masters to 'crush' Quit India

By Shamsul Islam*
The Quit India Movement (QIM), also known as ‘August Kranti' (August Revolution), was a nation-wide Civil Disobedience Movement for which a call was given on August 7, 1942 by the Bombay session of the All-India Congress Committee. It was to begin on August 9 as per Gandhi's call to 'Do or Die' in his Quit India speech delivered in Bombay at the Gowalia Tank Maidan on August 8. Since then August 9 is celebrated as August Kranti Divas.

Gujarat's incomplete canals: Narmada dam filled up, yet benefits 'won't reach' farmers

By Our Representative
Even as the Gujarat government is making all out efforts to fill up the Sardar Sarovar dam on Narmada river up to the full reservoir level (FRL), a senior farmer rights leader has said the huge reservoir, as of today, remains a “mirage for the farmers of Gujarat”.
In a statement, Sagar Rabari of the Khedut Ekta Manch (KEM), has said that though the dam’s reservoir is being filled up, the canal network remains complete. Quoting latest government figures, he says, meanwhile, the command area of the dam has been reduced from 18,45,000 hectares (ha) to 17,92,000 ha.
“According to the website of the Sardar Sarovar Narmada Nigam Ltd, which was last updated on Friday, while the main canal, of 458 km long, has been completed, 144 km of ranch canals out of the proposed length of 2731 km remain incomplete.
Then, as against the targeted 4,569 km distributaries, 4,347 km have been constructed, suggesting work for 222 km is still pending. And of the 15,670 km of minor canal…

Ceramic worker dies: 20,000 workers in Thangadh, Gujarat, 'risk' deadly silicosis

By Our Representative
Even as the country was busy preparing for the Janmashtami festival on Saturday, Hareshbhai, a 46-year-old ceramic worker from suffering from the fatal lung disease silicosis, passed away. He worked in a ceramic unit in Thangadh in Surendranagar district of Gujarat from 2000 to 2016.
Hareshbhai was diagnosed with the disease by the GCS Medical College, Naroda Road, Ahmedabad in 2014. He was found to be suffering from progressive massive fibrosis. He is left behind by his wife Rekha sister and two sons Deepak (18) and Umesh (12),
The death of Hareshbhai, says Jagdish Patel of the health rights group Peoples Training and Research Centre (PTRC), suggests that silicosis, an occupational disease, can be prevented but not cured, and the Factory Act has sufficient provisions to prevent this.
According to Patel, the pottery industry in the industrial town of Thangadh has evolved for a long time and locals as well as migrant workers are employed here. There are abou…

Cess for Gujarat construction workers: Spending less than 10%; no 'direct help' to beneficiaries

By Our Representative
While the Gujarat government’s Building and Other Construction Workers Welfare Board, set up in 2004, as of March 31, 2019, has collected a total cess of Rs 2,097.62 crore from the the builders, it has spent less than 10% -- Rs 197.17 crore. And, as on May 31, 2019, the total cess collection has reached Rs 2,583.16 crore, said a statement issued by Bandhkam Majur Sagathan general secretary Vipul Pandya.
Pointing out that just about 6.5 lakh out of 20 lakh workers have been registered under the board, Pandya said, vis-à-vis other states, Gujarat ranks No 13th in the amount spent on the welfare of the construction workers, while 11th in the amount collected.
And while the builders are obliged to pay just about 1% of the total cost of their project, the calculation of the cess is flawed: It is Rs 3,000 per square yard; accordingly, Rs 30 per square yard is collected. “Had the cess been collected on the real construction cost, it would have been at least Rs 7,000 cr…