Good debts, bad debts: Microcredit and managing debt in rural south India

Abstract

This paper engages with debates around microcredit, once a development success story, but now much critiqued. Arguing that microcredit can only be understood within the wider context of debt, we draw on ethnographic material from two villages in Tamil Nadu, to examine how microcredit through self‐help groups sits within a broader context of indebtedness among the rural labouring classes. We describe patterns and sources of borrowing among the poor, the ways in which debts are managed, negotiated and settled within households and the ways in which the management of debt is mediated by gender, caste, class and aspiration. The paper calls for a more nuanced understanding of debt: some debts are seen as ‘good’ and others as ‘bad’. We explore the ways in which microcredit, channelled through self‐help groups, is—against much contemporary criticism—perceived by women borrowers in our study villages as a source of ‘good debt’ and praised as an enabling factor in their everyday household management as well as in aspirations for mobility and development. We also argue that microcredit can have positive impacts by enabling social investments that enhance status and reduce dependency.

The gender of debt and credit: Insights from rural Tamil Nadu

“…Secondly, while male loans are more often used to invest and project themselves into the future, most of women's loans is simply intended to help make ends meet. Women also more often use their loans to repay other loans, which may indicate that they struggle more to repay, or reflect their role as budget managers with potential responsibility for household debt management (Guérin et al (2019); Carswell et al (2020); Guérin and Kumar (2020)). Thirdly, women's borrowing responsibilities appear to be strongly correlated with household poverty.…”

Transparency, exclusion and mediation: how digital and biometric technologies are transforming social protection in Tamil Nadu, India

“…1 Located within 20 km of the Tiruppur textile hub, the villages have very different linkages and connections to the city. The authors have conducted field research here since 2008, on a range of topics including changing livelihood strategies (Carswell & De Neve, 2014a), MGNREGA (Carswell & De Neve, 2014b), voting and elections (Carswell & De Neve, 2014c), and labour bondage and indebtedness (Carswell et al, 2021). The background to this paper is thus a longer-term understanding of different aspects of villagers' lives, and their multiple interactions with the state (Carswell, Chambers, & De Neve, 2019).…”

“…Indeed, biometric identification does not in itself convey entitlement or determine eligibility, nor does it eliminate the need for citizens to apply for a ration card or BPL status (Bhatia & Bhabha, 2017). As we have already shown, application and registration processes require in-person visits to government offices, dealings with bureaucracy, and leaning on patrons, networks and brokers (Carswell, De Neve, & Ponnarasu, 2021). Rao's study of Aadhaar registration among Delhi's homeless similarly revealed that UID becomes 'enmeshed with, supplements, and completes older forms of authorisation through documents and personal recommendations ' (2013, p. 76).…”

Class and Vulnerability to Debt in Rural India: A Statistical Overview*

“…As recent scholarship has shown, debts can be simultaneously exploitative and emancipatory. Debts can trap rural households in new relationships of exploitation even as they free them from old hierarchies that are based on caste and labor relations (Carswell 2020; Guérin and Venkatasubramanian 2020).…”