Urban households in debt rise to 22%, rural to 31%: NSSO survey

Urban households in debt rise to 22%, rural to 31%: NSSO survey , NEW DELHI: India's indebtedness rose sharply in both urban and rural areas over 2002 to 2013, with almost a third of rural households and more than a fifth of urban homes being in debt in 2013, a government survey showed.About 31.4% rural households and 22.4% urban homes were in debt, up from 26.5% and

17.8% respectively in 2002, according to the All-India Debt and Investment Survey done by the National Sample Survey Office (NSSO) in the 70th round. Although the key indicator report of the survey was released in December 2014, within a year of the completion of survey, NSSO has now released a detailed report with more tables and statements based on the same set of validated data. The average cash dues outstanding per household have been estimated at Rs32,522 and Rs84,625 for rural and urban areas respectively, while the average amount of debt per indebted household was Rs1.03 lakh and Rs3.78 lakh in the rural and urban areas respectively.

The survey report showed that in rural areas, nearly 12% of all households opted for short-term and medium-term borrowing, whereas 10% of the households availed themselves of long-term loans.

As for collateral, personal security accounted for 20% in rural and 12% in urban areas among the types of security against loan, followed by 6% in rural and 5% in urban areas against mortgage of immovable property. The report revealed a higher level of indebtedness in cultivator households than in non-cultivator households. In rural areas, 40% of the loans were taken for business purpose compared to 18.3% in urban households.

Land and building together accounted for about 90% of the total value of assets at the national level for indebted households and all households in both rural and urban areas.

Assets such as land, buildings, livestock, agricultural implements and machinery, non-farm business equipment and transport equipment were considered under physical assets while cash and kind dues receivable and shares, deposits, etc., were considered under financial assets.