Write down the causes of rural indebtedness in India?



The main causes are as under :
(i) Poverty: In fact, annual income of the farmers is very low. So, they always live below poverty line. They have to borrow money for many purposes.
(ii) Unproductive expenditure: Most of the farmers borrow to celebrate social customs like
marriages, religious festivals, etc. Births and deaths also lead to unproductive expenditure.
(iii) Litigation : The farmers borrow for litigation also. Litigation is always very expensive which adds to the problem of indebtedness.
(iv) To make improvement on land : The farmers mostly borrow to make improvement on land. It is a positive thinking but it needs to be done by saving and not by borrowing.
(v) Inherited debt: It is called ancestral debt also. A farmer inherits the debts of his father. It contributes a lot in rural indebtedness.
(vi) Illiteracy: The farmers are illiterate. The moneylenders encourage the farmers to borrow. They make a plan to mortgage their land. They charge higher rate of interest. The farmers are unable to repay the debt. Ultimately they take away the land of the farmers.