Indebted households in India reported higher debt levels between the two rounds of the national sample survey conducted six years apart, with indebted urban families reporting an average debt of 5.37 lakh at the end of June 2018, compared to 3.78 lakh in 2012.
The debt of indebted rural households fell from ₹ 1.03 lakh to ₹ 1.71 lakh between these two dates. It may have been higher or lower in the intervening period.
Families in debt accounted for 22% of rural households, unchanged from last time, while those in urban areas increased by 4% points to 35%.
Another survey conducted in parallel, showed that the average outstanding debt of agricultural households in 2018-19 was 74,121. Among farm households, 50.2% were in debt. Debt increased with the increase in the size of farms. Those who owed 10 hectares and more had loans to pay worth 7.91 lakh. They represented 81.4% of the households in the category. Farm households with between four and 10 hectares had 3.27 lakh of loans to pay and their share of their household category was 79.3%.
In 2012-13, the average outstanding debt of agricultural households was 47,000. At least 50% of all farm households reported being in debt. Those with 10+ hectares reported an unpaid debt of ₹ 2.9 lakh, while those in the 4-10 hectare category reported owing ₹ 1.83 lakh on average.
Farm households are those who report that their main source of income is growing or raising animals and that at least one family member has engaged in farming in the previous 365 days and that the household derives at least 4,000 more per year from farming activities.
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The number of agricultural households had increased to 93 million in 2018-19, against 90 million between 2012 and 2013. Their share in the total of rural households (172 million) fell to 54% against 57.8% of the 156 million households. rural populations in 2012-13.
Farm households reported that their average monthly income in 2018-2019 was 8,337. Of this total, 42% came from crop production and animal husbandry. In other words, more than half of their income came from wages, rental of land and non-agricultural activities.
In fact, marginal farmers, or those with up to one hectare (2.5 acres) who make up three-quarters of rural households, earn less than half of their monthly income from crops and livestock. This is a big change from 2012-13, when 60% of farm household income came from crops and livestock.
Assets were more than liabilities for rural and urban households, but the share of liquid assets, like stocks and bank deposits, was a fraction of the total.
Rural households had an average of 4.5% of their total assets in bank deposits. Among urban households, it was 9.2%, with a burst in the form of stocks. The rest was in bank deposits. At the end of June 2012, liquid financial assets such as deposits and loans receivable represented less than 2% of the total in rural areas and 5% in urban areas.
The gap between rural and urban households in terms of the value of assets held narrowed between the two rounds. In 2012, urban households held assets worth 123% more than those held by rural households. In the latest survey, the results of which were released earlier this month, the difference between asset values was 70%.
In 2012, a rural household held assets worth 10.07 lakh. These increased by 58% to reach 15.92 lakh in 2019. The average asset value of urban households increased by 18% during this period to reach ₹ 27 lakh. Asset prices have not been corrected for inflation, so it cannot be said in real terms how much better off they are.
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In 2012, indebted farming households had 73% more debt than non-farming households. Farmer households are not the same as farm households. Since anyone who cultivates 20 square meters or more is considered a cultivator, even the vegetable garden is eligible.
In urban areas, indebted independent households had 35% more debt than others. At least 31% of rural households and 22% of urban households were in debt.
Among states, the assets held by rural households in Haryana were nearly three times the average for all of India, reflecting the value of land due to its productivity and proximity to cities. Punjab came close, followed by Karnataka and Uttar Pradesh, which averaged a little higher than the national average. Fifth in the list was Telangana.
Among urban households, assets held by those in Maharashtra were worth 1.5 times the national average, followed by those in Kerala, Haryana, Gujarat and Uttar Pradesh.
While almost all rural households owned assets, the average value of assets held by Scheduled Castes (₹ 1.3 lakh), Scheduled Tribes (₹ 1.89 lakh) and other backward castes (₹ 2.12 lakh ) was much lower than that held by upper castes (₹ 4.05 lakh) in urban areas. This was also the case in rural areas, except that the assets were worth much less.
In a 2012 survey, the lowest 10% of rural households had, on average, assets worth 25,071. Their urban counterparts had nothing in terms of assets, just ₹ 291, possibly because durable goods are not considered assets for the purposes of the survey.
Bullion, gold and silver ornaments, and commodities held in inventory are not considered assets for the purposes of the investigation as their value cannot be determined with precision. 100% owned land and buildings, agricultural and transport equipment and family businesses were considered assets.