More than half of Indian Agricultural households are indebted and 1/4th of the loan is taken from the Money Lender
Sai Krishna Muthyanolla
April 22, 2015
This is part 2 of the series on the 70th round NSSO report on agricultural households. In Part 1, we looked at the estimated number of agricultural households and their social groups including the size of the land holding.  This article looks at the principle sources of income of the Agricultural households & the outstanding loans.
Principle Sources of Income
According to the NSS report, cultivation of land is the primary source of income for almost 2/3 (63.4%) of all the agricultural households. This is followed by Wage/Salaried employment for 22% households. 4% of the households are dependent on livestock for their income.
The state wise variations are interesting as Agricultural activity (cultivation, livestock and other agricultural activities) was reported to be the principal source of income for majority of the households in all the major States, except Kerala where about 61 percent of the agricultural households reported to have earned maximum income from sources other than agricultural activities. Among the major States, more than 80 percent of agricultural households from Assam, Chhattisgarh and Telangana reported agricultural activity as their principal source of income. Telangana topped the charts with 89% of the households reporting their principle source of income as agricultural activity. More than 78 percent of rural households of Rajasthan were agricultural households (as mentioned in the previous article), but about 47 percent of these agricultural households reported sources other than agricultural activity as their principal source of income. Agricultural activity was principal source of income for about 78 percent of the agricultural households of Madhya Pradesh, whereas little less than 71 percent of rural households were agricultural households. More than9 percent of agricultural households of Tamil Nadu, Gujarat, Punjab and Haryana reported livestock as their principal source of income.
Level of indebtedness
52% of all the agricultural households in the country were estimated to be indebted according to the NSS report.  The average amount of outstanding loan per agricultural household was Rs.47000/-.
Among the major States, Andhra Pradesh had the highest share of indebted agricultural households in the country (92.9 percent) followed by Telangana (89.1 percent) and Tamil Nadu (82.5 percent). Assam (17.5 percent), Jharkhand (28.9 percent), and Chhattisgarh (37.2 percent) were the major States with lowest share of indebted agricultural households. The average amount of outstanding loan was highest for Kerala (Rs.213600/-) followed by Andhra Pradesh (Rs.123400) and Punjab (Rs.119500). Assam (Rs.3400), Jharkhand (Rs.5700) and Chhattisgarh (Rs.10200) were the States with lowest amount of average outstanding loan.
Loans from the Money lender
Of the average outstanding loan amount of Rs 47,000 at the all India level, about 26% of the loan is taken from the Money Lender. There are again wide variations within states. In Telangana, Bihar & Andhra Pradesh, more than 50% of the outstanding loan is from the money lender. Though Kerala has the highest amount of outstanding loan of Rs 213600, only 2.2% of this loan is from the money lender. This is a broad indicator of access to the banking system for the agricultural households. In some of the states with the high amounts of outstanding loans, the percentage of loan taken from the money lender is less than 25%. States like Tamil Nadu (25.5%), Madhya Pradesh (24.2%), Punjab (15%), and Maharashtra (5%) have high amounts of outstanding loan, but a very low proportion of this is from the money lender.
Source: Key Indicators of Situation of Agricultural Households in India, NSS 70 round.