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Research Article Open Access

Extent and Incidence of Agricultural Indebtedness in India


This paper analyzes the extent and incidence of indebtedness among agricultural households in India using state-level data from the National Sample Survey 70th Round on agricultural indebtedness for the year 2011-12. The determinants of the incidence of indebtedness are also investigated. Using an Ordinary Least Squares framework, the paper proposes an empirical model for studying the determinants of incidence of agricultural indebtedness from a structural perspective. Recognizing the fact that indebtedness in itself is not the problem but its unproductive use is, the estimations reveal that improving literacy, reducing gender-based unemployment gap, promoting irrigation, improving the sex ratio, increasing productive investment and reducing poverty rate can help to improve the level and composition of the incidence of indebtedness in rural India. The extent of indebtedness is found to be strongly correlated with the landholding distribution in India, which corroborates the extant findings.

Bhagirath Prakash Baria*

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