Rural Household Indebtedness in Tamil Nadu: An Analysis of Socioeconomic Determinants and Credit Accessibility

Abstract

Household indebtedness is an important socioeconomic issue influencing rural livelihoods, agricultural investment, consumption and financial stability. In Tamil Nadu, households depend on formal and informal credit to finance agricultural activities, small businesses, education, healthcare, housing and family-related expenditure. Although access to credit supports economic development, excessive borrowing and inadequate repayment capacity may increase household financial vulnerability. This article examines household indebtedness in Tamil Nadu using secondary data, with particular reference to the socioeconomic determinants of borrowing, access to institutional credit and the differences between rural and urban households. The latest official All India Debt and Investment Survey (AIDIS), conducted by the National Statistical Office during 2019, reported an incidence of indebtedness of 44.2% among rural households and 26.1% among urban households in Tamil Nadu. The corresponding average debt amounts per household were ₹85,000 and ₹40,000, respectively, as of 30 June 2018. These statistics highlight the importance of examining household liabilities alongside income, assets and access to affordable credit.  The study proposes a secondary-data-based analytical framework incorporating descriptive statistics, comparative analysis and logistic and Tobit regression models. It identifies household income, land ownership, education, occupational status, interest rates, credit sources and exposure to economic risks as important variables for investigation. The article also discusses policy measures to strengthen financial inclusion, responsible lending and household financial resilience in Tamil Nadu.