Many day labourers committed suicide in 2021 under the weight of their debts

India’s informal sector accounts for 72% of workers. As a result, when the unemployment rate doubled due to the Covid-19 pandemic, the indebtedness of households dependent on informal labour - who had no social security - shot up. These households have since experienced a real private debt crisis.

Since the pandemic, most Indian households that have taken on debt have done so to cover their living or medical expenses, which increased from an average of Rs 1,900 (22€) per month to Rs 4,700 (more than 50€) during the pandemic.

Since the pandemic, most households that have taken on debt have done so to cover their living or medical expenses, which increased from an average of Rs 1,900 per month to an average of Rs 4,700 during the pandemic.

This has had huge consequences. Many day labourers committed suicide in 2021 under the weight of their debts. They are the category with the highest proportion of suicides in India in 2021.

While there are laws to protect households failing to repay their debts, they are not enforced. As a result, when repayment difficulties arise, households pay penalties in the form of additional interest, lose their homes and land.

Chinmayi Naik (Working Peoples’ Coalition in India)

The state and banks also ensure that no alternative to credit emerges. The Central Bank of India, for example, has made a speech against tontine schemes on the grounds that they are not profitable... Everything is done to make people dependent on credit and microcredit. For example, in the contracts signed by people who receive a microcredit, there is no mention of the interest rate. It is only much later that they realise how much they will have to pay back, thus falling into a downward spiral of private debt without having been properly informed.