Rural households are more in debt vis-a-vis urban households, and account for over 60 per cent of the total debt in the country.The latest data on household indebtedness in India brought out by the National Sample Survey Organisation (NSSO) today shows that rural households account for roughly 63 per cent of the aggregate outstanding debt which stood at Rs 1,76,795 crore as on June 2002. In absolute terms this works out to Rs 1,11,468 crore.The survey which sampled over 6,500 villages and 3,757 urban blocks, covering 91,192 households in rural areas and 52,093 in urban areas shows that indebtedness was more widespread in rural areas in all the southern states—Andhra Pradesh, Kerala, Tamil Nadu and Karnataka. Rajasthan is the only state in the remaining part of the country that shows a similar phenomenon.According to the survey, the incidence of indebtedness (IOI) in all these states exceeded 30 per cent. It further adds that in the urban sector, IOI was highest in Kerala (37 per cent). The other states that followed Kerala are AP (29.8 per cent), Gujarat (21.4 per cent) and Orissa (19.2 per cent). In rural Bihar and urban Jammu and Kashmir, only 25 to 26 per cent of the cash debt was for less than a year’s duration while at least 10 per cent of rural debt in Bihar and West Bengal were contracted for a period of 10 years and above, the report mentions.However, the share of interest-free debt was 20 per cent or more for rural households in Assam, Gujarat, Himachal Pradesh, Jammu and Kashmir, Uttaranchal and West Bengal. The report says that as a contrast, the share of interest-free debt was quite low—about 3 per cent or less in the rural areas of AP and MP.The survey also remarks that among institutional agencies, cooperative societies and commercial banks were the two most important sources for funds in both rural and urban areas. Together, they accounted for about 50 per cent of the debt.Among non-institutional agencies, professional moneylenders accounted for about 20 per cent and 13 per cent of the debt in rural and urban areas respectively. Interestingly, the survey points out that money borrowed from relatives and friends accounted for 7 per cent of the rural debt. In the urban areas, this stood a shade higher at 8 per cent.What it is of interest to note is that debt taken for non-business purposes accounted for about 47 per cent of the outstanding debt of households in the rural areas.
