Caste Differences in Access to Credit in India:Evidence from NSSO Household Indebtedness Data

This paper explores the extent of disparity in financial access across the social groups in India using the unit level data of All India Debt and Investment Survey data published decennially by NSSO. The ratio of asset share and population share consistently improved for GEN households in both rural and urban India since 90s while for the marginalised social groups ST and SC, it improved in the first decade post liberalisation but worsened in the decade following the second millennium. In rural India, the average debt per household of the tribal population grew at a rate lower than that of all households taken together over the entire period. However, the non-institutional share of indebtedness of ST households consistently upsurged over the past three decennial rounds of NSSO in both rural and urban areas with the growth being faster in the latter. The average debt per household of ST as a percentage of ‘Others’ fell sharply and consistently in the past three indebtedness survey rounds of NSSO. ST households had the lowest incidence of indebtedness not only from institutional sources but also from all sources combined. The average amount of debt from all sources was the lowest for ST households in both rural and urban areas. Further, the productive share of credit availed, the expenses incurred on farm and non-farm business was the lowest for SC in rural areas and ST in urban areas. Looking at the agricultural credit scenario, the proportion of loans of farm households from non-institutional sources continues to dominate over that from institutional sources. This was more pronounced for marginalised castes. Evidence also suggested that the heaviest burden of Professional Money Lenders fell largely on small farm size classes and backward social groups.