Question

Analyse the causes for Rural Indebtedness.

Answer 1

1. Poverty of farmers: The vicious circle of poverty fore es the farmers to borrow for consumption, cultivation, and celebrations. Thus, poverty’s debt and high rates of interest hold the farmer in the grip of money lenders.

    

2. Failure of monsoon: Frequent failure of monsoon is a curse to the farmers and they have to suffer due to the failure of nature. Therefore, farmers find it difficult to identify good years to repay their debts.

    

3. Litigation: Due to land disputes litigation in the court compels them to borrow heavily. Being uneducated and ignorant they are caught in the litigation process and dry away their savings and resources.

    

4. Money lenders and high rate of interest: The rate of interest charged by the local money lenders is very high and the compounding of interest leads to perpetuating indebtedness of the farmer.