Year: 2026 | Month: March | Volume 71 | Issue 1
Magnitude and Determinants of Indebtedness among Rural Labour Households in Punjab
Rupinder Kaur* and Anita Rani
DOI:10.46852/0424-2513.1.2026.6
Abstract:
This study examines the extent, structure, and determinants of indebtedness among rural labour households in Punjab using primary data collected from 530 households across 22 villages. The findings reveal a pervasive incidence of debt, with over 92 per cent of households being indebted, particularly among agricultural labourers. A substantial share of borrowing (over four-fifths) originates from non-institutional sources such as large farmers and moneylenders, often at exorbitant interest rates exceeding 15 per cent per annum. Borrowing is predominantly driven by consumption needs, especially socio-religious ceremonies and purchase of consumer goods, reflecting structural income inadequacies. Econometric analysis indicates that family size, number of dependents, reliance on non-institutional credit, and unproductive expenditure significantly influence the level of indebtedness. The study underscores the persistence of exploitative credit structures and highlights the urgent need for strengthening institutional credit access and reducing dependence on informal lending sources to mitigate rural indebtedness.
Highlights
- Over 92% of rural labour households are indebted in Punjab.
- Non-institutional sources dominate borrowing at high interest rates.
- Loans are mainly used for consumption and socio-religious purposes.
- Family size, dependents, and informal credit reliance drive indebtedness.
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