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

NSSO data show increasing use of debt to meet household expenses rather than to create productive assets.

Written by ZEESHAN SHAIKH | Mumbai | Updated: January 9, 2017 5:47 am

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 data show.

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.

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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. A decade on, credit uptake was as high as 8.51% of their total assets in rural areas and 14.84% in urban areas, the data show. 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.

The growth in the Average Value of Assets (AVA) has not been commensurate with the growth in credit uptake. The AVA held by each household was Rs 2.65 lakh for rural areas and Rs 4.17 lakh for urban areas on average as per the 2003 report. The numbers increased to Rs 12.16 lakh for rural areas and Rs 25.48 lakh for urban areas in the later report.

For the purposes of the survey, ‘household assets’ included everything that was owned by the household, which had money value. Physical assets such as land, buildings, livestock, agricultural machinery and implements were included, as were financial assets such as dues receivable on loans advanced in cash or kind; shares in companies and cooperative societies, banks, national saving certificates and the like; deposits in companies, banks, post offices, and with individuals. It did not, however, include durable goods and ornaments.

All claims against a household held by others were considered liabilities of the household. Only cash dues were considered.

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. The AVA is lowest for a rural SC household, which has total assets worth Rs 6.48 lakh. The highest value of assets is for an open category urban household, which has total assets worth Rs 39.27 lakh on average.

The highest debt burden in terms of value is on open category urban households — Rs 5.65 lakh per household on average. However, the biggest quantitative increase in borrowings was among the urban Dalit community, which in the 70th Round had a DAR of 18.46%, the highest among all social groups.

The bulk of the money borrowed was spent on meeting household expenses — 60% in rural areas in 81% in urban areas. In 2002-03, the corresponding numbers for rural and urban areas were only 47% and 75%.

Urban SCs and STs used nearly 92% and 95% of their debt respectively to meet household needs, data from the 70th Round show.

“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. The figures suggest that the community is catching up with others when it comes to consumption. However, the fact that the bulk of the money is spent in meeting household expenses rather than in wealth generation is a worrying aspect,” Dr Abdul Shaban, chairperson of the Centre for Public Policy, Habitat and Human Development at the Tata Institute of Social Sciences (TISS), said.