Debt Trap

Covid-19 has intensified the indebtedness crisis that plagued Indian households even before the pandemic. An analysis by Dvara Research, a policy research organisation, found that even before the pandemic, debts had risen steeply by 84% in rural India and 42% in urban India. Household debt to GDP rate rose sharply to 37.3 per cent in 2020-21 from 32.5 per cent in 2019-20.

60% of domestic workers were not paid during the lockdown; and six months after the lockdown, 31% of domestic workers had not found employment and even fewer had received support from their employers. This forced them deeper into debt to feed their families.

The National Alliance Group of Denotified and Nomadic Tribes along with other civil society organisations surveyed 98,000 Dalit, Muslim, Adivasi and DNT (denotified tribe) families in 476 rural hamlets and urban mohallas. The survey found that 3 in 4 Dalit and DNT households were pushed further into debt. Stripped of employment, they were forced to take loans from moneylenders at steep interest rates.

On India’s Poor