Dynamics of Farm Indebtedness in the Agriculturally Developed Regions of India: A Case of Cauvery Delta Zone Across Tamil Nadu and Puducherry

Tamil Nadu is one of India’s most agriculturally deve­loped states, but has high-income inequality and indeb­tedness among its farmers. This study explores the dynamics of farm indebtedness among farmers in the Cauvery Delta Zone of combined Tamil Nadu state and Puducherry Union Territory. Resonating with the state-level trend, income inequality among the sampled farm households is significantly high, with a Gini coefficient of 0.56, and it decreases with an increase in farm size. Similarly, 80% of farmers are indebted, with the incidence of indebtedness, extent of indebtedness and proportion of institutional loanees increasing with farm size. Though all categories of farmers have considerable access to institutional credit, large farmers can fulfil all their credit needs through institutional sources, while small landholders have to fulfil almost 30% of their credit needs through non-institutional sources. Elderly farmers, large landholders and farm households with more dependent members are more prone to indebtedness than their counterparts, while farm households earning more income and possessing more assets are less prone to indebtedness. Various production, weather, market and institutional constraints deter farmers from repaying their outstanding loans, resulting in a vicious cycle of indebtedness. Therefore, farmers and youth of small farm households should improve their alternative employment opportunities by utilizing the state-sponsored skill development programmes and enhance their financial accessibility by availing Kisan Credit Cards.