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The purpose of taking debt in rural areas has seen a dramatic change, with households spending more debt on areas other than business in July 2012-June 2013 compared to a decade ago. In urban areas, substantial debt was pent on non-business purposes 10 years ago, too, though this increased further in 2012-13.
This, among other findings, was revealed in a survey on key indicators of debt and investment in India, released by the National Sample Survey Office (NSSO). Non-business purposes include medical treatment, education, housing, litigation, repayment of debt, and other household expenditure.
In 2002-03, 53 per cent of debt in rural areas went towards business purposes. By 2012-13, this fell to 40 per cent.
Urban households spent 25 per cent of their debt on business purposes in 2002-03. This fell to 18.3 per cent in 2012-13.
Pronab Sen, chairman of the National Statistical Commission, attributed the trend of spending more debt on business in rural areas to a tendency in such areas to set up businesses, owing to lack of other opportunities.
Among rural and urban areas, there was a substantial difference in the way debt was spent. For instance, in rural areas, only the top 10 per cent of households spent a larger portion of debt on business (55.5 per cent). However, in urban areas, the top 10 per cent spent 24 per cent of their debt on business purposes.
Sen said different classes viewed expenditure such as health and education differently. More was spent under these heads when the opportunity to do so was greater, he added. As such, it seems there is increased prosperity or awareness on spending under these heads.
A substantial part of non-business expenditure might also be accounted for by housing, particularly in urban areas, with tax savings, easy access to capital, appreciation of investment in property, etc, likely to have driven such expenditure.
The survey covered about 60,000 rural households and 45,000 urban ones.
