As of March 2012, only 11.5 per cent of the over 150,000 households surveyed were borrower households. This is consistent with the results seen in the previous surveys. As of December 2011 this ratio was 11.4 per cent and as of March 2011 it was 11.7 per cent.
The proportion of households reporting borrowings has declined since 2010 when it was in the range of 13 to 14 per cent. This fell to 10.6 per cent in June 2011 and to 10.4 per cent in September 2011 before recovering a bit to its current level.
Household borrowing seems to be a very south-Indian phenomenon. Kerala, Pondicherry, Andhra Pradesh, Karnataka, Chhattisgarh and Tamil Nadu have a significantly higher ratio of borrower households compared to other states.
Over a quarter of the households in the southern states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Pondicherry are borrower households. Kerala has the highest proportion of borrower households. Over one-third of the households in this rich state are borrower households. In Andhra Pradesh, Karnataka and Pondicherry the proportion is closer to 25 per cent and in Tamil Nadu it is lower at around 16 per cent. But, even Tamil Nadu is much higher than the national average.
Goa and Chhattisgarh also have a high proportion of borrower households of around 16 per cent.
The southern states are very distinct in their propensity to borrow, from the rest of India. The average proportion of households that borrow in the rest of India is only about 5 per cent, compared to the over 25 per cent ratio for southern states.
The proportion of borrower households is very low at around 4 per cent in western states of Rajasthan and Gujarat. It is even lower at barely two per cent in Haryana, Delhi and Maharashtra.
Excepting Chennai where 41 per cent of the households reported an outstanding borrowing, all metros had a low borrowing proportion. In Bangalore 6 per cent of the households reported an outstanding borrowing. In Mumbai this proportion dropped to 3 per cent; in Kolkata to 2.6 per cent and in Delhi to less than two per cent.
In general, rural India reported a higher proportion of borrower households. At 13.4 per cent this was significantly higher than the 7.4 per cent ratio in urban India as of March 2012.
Over the past five quarters, these proportions have been of the same order of magnitude. There have been no big shifts in the borrower household proportion. This is understandable as it would be quite difficult for households to shed their debts in large numbers. Further, given the increase in interest rates and problems faced by the micro-finance lending institutions, the proportion of borrower households would not increase too soon either.
Given these factors, the sudden and sharp increase in borrower households in Bihar seems suspect. We have had some difficulty in ensuring quality in Bihar in the past two surveys and the increase in borrower households seems to be a reflection of poor data quality than ground reality. Data on borrower households is relatively poor in Jharkhand and Orissa as well. A further tightening of the survey execution in these regions is expected to improve the quality of data in the coming surveys.