Analysing Farmer Indebtedness: Determinants and Repayment Constraints in Bikaner District, India

Abstract

Farmer indebtedness in water-scarce regions poses a critical challenge to rural livelihoods and credit sustainability. This study examines 90 farm households in Bikaner district, Rajasthan—where 67.8% of households carry outstanding debt averaging ₹181.8 thousand each—to identify the key determinants of borrowing levels, default risk, and repayment constraints. Multiple linear regression explains 54.1% of variation in total loans, revealing that access to irrigated land (b = 0.495, p < 0.01), higher education (b = 0.234, p < 0.05), and greater reliance on non-institutional credit (b = 0.252, p < 0.01) significantly increase borrowing, while demographic and socio-economic factors such as age and non-farm income exert weaker effects. Logistic regression shows that older farmers (β = 0.779, p < 0.05) and those borrowing informally (β = 0.803, p < 0.05) face higher default risk, whereas larger landholdings (β = –0.140, p < 0.05) and off-farm income (β = –1.331, p < 0.10) enhance repayment capacity. The foremost barriers to loan servicing are low farmgate prices (64.8%), inadequate income (64.1%), and natural calamities (64.0%), compounded by crop failures, loan diversion, and excessive farm expenditure.