Institute for Social and Economic Change

Working Paper: 267

Nature and Dimensions of Farmers’
Indebtedness in India and Karnataka


Meenakshi Rajeev
B P Vani
Manojit Bhattacharjee



This paper examines the nature and extent of farmers’ indebtedness in India using the unit record data from the 59th round of the NSSO, provides a comparative picture of the major Indian States and an in-depth analysis of Karnataka. In terms of access to credit, seen through the extent of indebtedness, Karnataka is better placed than many Indian States, however, Andhra Pradesh, Tamil Nadu, Punjab and Kerala are ahead of Karnataka. Ironically, almost half of the credit is still provided by the informal sector in Karnataka (on an average). Poor farmers with lower land holdings are much more deprived of formal sources of credit than the comparatively richer ones. Thus, they also pay a much higher rate of interest with modal value of 36 per cent. Nevertheless, it is heartening to note that loans are taken mostly for income generating purposes; but it also indirectly implies that the poor are not getting access to formal sources of credit even for the income generating purposes.

Working Papers