Causes Of Rural Indebtedness Essay

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Rural indebtedness has been the evergreen friend of the Indian farmers and rural society.The burden of debt passes on from generation to generation. Despite several attempts to eradicate it, The number of those in the grip of this vicious problem is very large.While borrowing money ,these unaware farmers who are poverty stricken do not pay attention to their repaying capacity and for them even a little debt becomes a trap out of which they cannot come out. Rural borrowing and rural debt are different terms and have a thin line of difference. There is no harm in borrowing especially when the funds are used for agricultural operations. But indebtedness arises when the income of the farmer is not sufficient to repay the debt incurred or when…show more content…
the farmer once caught by the money-lender can rarely come out of his clutches.
There are several other reasons like
1.Poverty of the farmers: The basic cause of the rural indebtedness in India is the extreme poverty of the farmers. The farmers being poor have to borrow for various purposes. Sometimes, the crops fail because of the failure of monsoons, or because of floods etc. They have to purchase seeds, implements, cattle etc. and since they have no past savings to use, they are forced to borrow. Just as poverty forces him to borrow, it is his poverty again which forces him to have so little for paying off his debt.
2. Ancestral debt: The most important cause of the existing rural indebtedness is the ancestral debt. Many agriculturists start their career with a heavy burden of ancestral debt and drag the loan for the whole of their lives, This increases the debt burdens on the inheritors, every time the debt is thus passed on.
3. Ease of taking loan: Formal agencies have fixed hours and stipulate that some formalities should be observed before the loans are sanctioned and then paid. On the other hand, a money lender has been easily approachable even at odd hours. This encourages

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