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The Journal of Peasant Studies
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Debt and vulnerability: indebtedness, institutions
and smallholder agriculture in South India
To cite this article: Vijay Ramprasad (2018): Debt and vulnerability: indebtedness,
institutions and smallholder agriculture in South India, The Journal of Peasant Studies, DOI:
To link to this article: https://doi.org/10.1080/03066150.2018.1460597
Published online: 10 May 2018.
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Debt and vulnerability: indebtedness, institutions and
smallholder agriculture in South India
Department of Forest Resources, University of Minnesota, Minneapolis, MN, USA
Expanding access to credit remains a key central government
strategy for promoting agricultural development and livelihood
diversification in south India and more widely. Smallholders
borrowing from multiple credit sources are faced with obligations
in addition to financial repayment. Available evidence on the
consequences of indebtedness extending beyond monetary debt
and its influence on vulnerability is incomplete in important ways.
This paper presents an integrated vulnerability framework and
illustrates the framework through case studies of three pairs of
smallholder clients and credit sources. Using process-tracing and
progressive contextualization methods, this paper shows the
diversity of feedbacks that shape indebtedness and provides
examples of social-ecological consequences. Unpacking these
consequences in individual cases demonstrates indebtedness as
an important root cause of vulnerability, which is in contrast to an
examination of proximate causes, such as credit policy or
temperature, that is the focus of a large share of scholarship. The
paper shows that different credit sources are associated with
different sets of obligations, leading to varied livelihood and
agricultural consequences. Suggesting ‘credit stacking’as an
important adaptation strategy and research agenda item, the
paper makes a plea for careful analysis of the conditions when
credit is a factor in adaptive capacity and indebtedness of
Credit; obligations; rainfed
Smallholder farmers in rainfed areas are the principal managers of the world’s food supply
and they depend on multiple sources of credit. Conditions of credit that positively
enhance their livelihood will potentially lead to long-lasting synergies between multiple
and often competing objectives along social and ecological dimensions. The paper inves-
tigates consequences of indebtedness in rainfed areas of India and addresses the ques-
tion: What are the social-ecological consequences of credit and how do these
consequences influence the vulnerability of smallholders?
Drawing on the concepts of vulnerability and indebtedness, and a social-ecological
framing of the problem, this research answers the question by analyzing associations
© 2018 Informa UK Limited, trading as Taylor & Francis Group
CONTACT Vijay Ramprasad email@example.com Department of Forest Resources, University of Minnesota, Min-
neapolis, MN 55455, USA
THE JOURNAL OF PEASANT STUDIES, 2018
between credit institutions, and livelihoods and agricultural practices. I present an inte-
grated vulnerability framework of a coupled social-ecological smallholder system and
offer explanations for indebtedness as an important root cause of vulnerability. I then illus-
trate the framework with three credit sources commonly accessed by smallholders: (1)
contractors, (2) moneylenders/traders (informal institutions), and (3) bank–non-govern-
mental organization (NGO)-mediated group lending (formal institutions), to show feed-
backs among indebtedness, livelihoods and landholdings. I expand credit to include its
transformation to indebtedness, and explain the social-ecological consequences that
follow and its influence on smallholder vulnerability. Lastly, findings are discussed
within the broader scholarship of vulnerability.
2. Indebtedness and vulnerability in rainfed agriculture
Rainfed agriculture is based on infiltrated rainfall and supplemental water-use techniques.
It is practiced on 80 percent of the world’s agricultural land, approximately 1.75 billion hec-
tares, generating around 70 percent of the world’s staple foods (NRAA 2012). In India,
rainfed agriculture represents 55 percent of the net sown area (NRAA 2012), but it
suffers from crop failures and low yields due to monsoonal rainfall variability and historical
exclusion from development policy. These areas are susceptible to social and biophysical
changes, making credit an important determinant of livelihood strategies and well-being.
Credit facilitates farmers’ability to increase investment in agricultural activities; meet con-
sumption necessities (Rakesh 2006; Narayanan 2015); insure against rainfall risks (Taylor
2013); and buffer themselves against unexpected health events, and during cultural cer-
emonies (Krishna 2006).
2.1. Contours of the rural financial landscape, and formal and informal credit
Studies find that farmers access multiple credit sources, each of which serves a different
purpose, depending on household circumstances, ease and history of access, and strat-
egies to manage risk and livelihoods (Bardhan and Udry 1999; Collins et al. 2009; Schindler
2010; Guérin et al. 2012). In this context, a ‘financial landscape’metaphor captures the
complexity of rural credit (Bouman and Hospes 1994; Schrader 1997), where physical fea-
tures of formal financial institutions interspersed with informal intermediaries represent
the diversity, dynamics and connectedness of credit sources. Scholarship on rural
finance broadly distinguishes credit into formal (e.g. commercial banks, regional rural
banks [RRB] and credit cooperatives) and informal pathways (e.g. moneylenders, interme-
diaries, traders, contractors, and friends and relatives). The two ends of the formal–infor-
mal continuum demarcate the formality in terms of agreement between the lender and
the borrower, and supervision of lending policy through accountable procedures. Credit
sources are, however, distributed along the continuum, blurring the two categories.
In India, credit policy has strived toward financial inclusion of marginalized commu-
nities through an expanding network of rural banks and credit groups, leading to lower
poverty, expanded non-agricultural growth and a reduced role of moneylenders (Binswan-
ger and Khandker 1993; Burgess and Pande 2005). Critiques of formal lending, however,
highlight procedural opaqueness, lack of timeliness, and corruption (Kochar 1997;
Rakesh 2006; Kaur and Dey 2013), which along with credit rationing and tightly scheduled
payments deter and exclude vulnerable groups from accessing formal sources (Schindler
2010; Pradhan 2013; Reserve Bank of India 2015). Furthermore, international donor
agencies and NGOs present market mechanisms as the best designer of the credit land-
scape in which credit sources are free to expand on terms that regulate the supply and
demand for capital (Cull, Demirgüç-Kunt, and Morduch 2008; Aitken 2010). This perspec-
tive suggests that performance of rural credit depends on transaction costs, interest rates,
information availability, and judicious substitution between consumption and production.
It recommends developing credit institutions to address market imperfections by clarifica-
tion of property rights, legal enforcement of contracts and diffusion of information (Besley
1994; Banerjee and Duflo 2007; Conning and Udry 2007). However, this scholarship echoes
an antipathy to informal pathways, finding that borrowing from informal sources can be
socially and economically expensive (Aleem 1990; Banerjee and Duflo 2007; Shah, Rao,
and Shankar 2007).
Contrastingly, studies in anthropology and sociology provide contextual details of the
rural credit landscape and propose that well-functioning informal credit sources are
neither exploitative nor uncommon –properties that are instead attributed to formal
credit sources (Lazzarato 2012). Ethnographic accounts of microfinance programs (Lont
and Hospes 2004), farmer distress (Sadanandan 2014) and contract farming (Little and
Watts 1994) unpack the effects of credit and debt as producing social ties, allegiances,
enmities and hostilities, and questions the presumptions of credit as liberator and debt
as a burden (Blau 1964; Aitken 2015). This scholarship suggests that informal sources
play an important role in developing a contextual approach to credit policy, and must
not be easily dismissed. The key insight from this literature is the construction of bound-
aries that include or exclude groups from credit, creation of hierarchies for borrowing, and
ascription of moral tensions for non-repayment (Peebles 2010).
2.2. Credit–debt duality
Debt is the obligation that follows acceptance of a credit opportunity. The state of obli-
gation to repay (Greenberg 1980) of an individual or an institution is indebtedness. An
interdisciplinary scholarship outlines two factors that contribute to the complexity and
pervasive nature of indebtedness. They are the duality of credit and debt, and the connect-
edness of debt through space and time and across scales.
First, the inseparable dyad of credit and debt consistently identifies credit as power
and debt as a weakness,
associating a hierarchy of meaning and positive and negative
connotations more broadly. This duality is represented by the transformation of credit
from its availability to its acceptance occurring over time, or the realization of a potential
offer. On acceptance of terms, credit transforms into debt and diverges, with credit per-
forming the role of a facilitating input and debt socializing consequences, livelihoods
and everyday life more generally (Peebles 2010). Thus, both may exist as sides of the
Lazzarato (2012, 89): ‘Debt constitutes the most deterritoralized and the most general power relation through which class
struggle is waged’.
Peebles (2010), Aitken (2015), Ruddle (2011), and Taylor (2013) list various descriptions of the burden. Look at Marcel
Mauss’sThe gift: the form and reason for exchange in archaic societies for a contrasting study on gift and debt. Greenberg
(1980) describes the conceptualization of indebtedness, associated motivations, and cognitive and behavioral
THE JOURNAL OF PEASANT STUDIES 3
same coin, but they immediately grow more complicated with passage of time, because
credit can exist with a potential to be borrowed but not realized (Gregory 2012; Deville
and Seigworth 2015). Policy and scholarship on rural finance reflects this hierarchy in its
favoring of credit over debt and in exteriorizing poverty (Mosse 2010), making indebted-
ness less a factor of relationships and more a consequence of individual choices. Further-
more, scholarship on neoliberalization points at the creation of economic space that tasks
individuals with household financial management and positions them as ‘risk-capable’
agents (Lazzarato 2012; Aitken 2015). These atomized individuals are recipients of credit
at the tail end of intricate financial chains placed at regional and national environments.
As applied here, smallholders must bear costs and risks associated with delivery of
credit and manage themselves as entrepreneurs who take responsibility for their
current social-economic condition.
The credit–debt duality creates contrasting interpret-
ations, which on the one hand demands a more effective credit policy of greater scope
(Pradhan 2013) and on the other implicates indebtedness as causative of farmer distress
(Kennedy and King 2014).
Second, indebtedness connects across space, time and scale. As collateral for loans,
indebtedness connects spaces such as landholdings with volume of credit. Lenders evalu-
ate land quality by the presence of irrigation, soil quality and topography, and estimate
past crop production to assess a borrower’s income and risk of defaulting. Smallholders
owning tiny parcels of marginal quality are particularly disadvantaged, forcing them
toward informal sources to improve land quality (e.g. increased investment in tube-
wells), further increasing indebtedness (Taylor 2013). Across time, credit connects previous
repayment behavior and current economic condition to make a claim on future income
and shape livelihood strategies that farmers engage in to generate it. The maintenance
of credit relations for future need encompasses past debt relations and opportunities
for new ones, which become important under uncertain conditions. Smallholders, as
this paper will show, maintain credit relations for future use, even if such relations are
exploitative. Scholarship on climate change adaptation points at this connectivity,
where vulnerable populations maintain access to institutional interventions and
implement adaptation strategies under changing conditions (Agrawal 2008). In short:
the indebtedness process
explains a set of events, actions and steps that arise from acces-
sing credit sources and the ensuing indebtedness and social-ecological consequences that
2.3. Social-ecological consequences of credit and limitations in literature
Because perspectives differ in their origins, constituents and assumptions of credit, they
differ considerably in how they address consequences. However, only a handful of
credit consequences are well understood, and these dimensions are rarely studied
together. First, along the social dimension, livelihood and household-level effects of
credit are well acknowledged. Mosse et al. (2002) find that debt management of poor
households in southern India is critically linked to migration for labor. Here, migration
serves as a livelihood coping strategy that provides the income necessary to service
Contrast this with Mosse (2010) who presents poverty in a relational context.
Adapted from Farrington, Mosse, and Rew (2005).
debts taken from moneylenders and traders for agricultural inputs. In the best-case scen-
ario, such households migrate to manage risk, build assets, and smooth consumption con-
straints (De Haan, Brock, and Coulibaly 2002). In extreme cases, debt becomes an
instrument of coercion (Breman 1996) that demands sale of labor, marriage of daughters
in return for bride price or even sale of landholding (Mosse et al. 2002; Singh 2002). From
the relatively small number of studies that address consequences of indebtedness, Gerber
(2013) creates a four-fold classification of perspectives on credit and debt that: (1) empha-
size the poverty-generating and stagnating effects of rural indebtedness (or stagnation-
ists), (2) stress the credit-based improvement of production and associated
entrepreneurial spirit (or formalists), (3) highlight the gradual shift from moral economy
of local lending practices toward an impersonal large-scale formal credit system (or cultur-
alists), or (4) emphasize the exploitation and social differentiation effects of credit and debt
(or Marxists). Using this classification, he unravels several ‘hidden consequences’of debt
that a rural community in East Java faced, such as increased work hours, producing com-
modities for money rather than sustenance, market discipline, forced commercialization
and labor, and loss of land. A study by Binswanger and Khandker (1995) investigating
the impacts of formal credit on agriculture found that increased access to formal credit
led to only modest increases in crop output, coupled with rapid increase in the use of
chemical inputs and a substantial reduction in agricultural employment. With an expan-
sion of credit, they suggest that substitution of capital for labor creates opportunities
for non-farm employment and thus drives up labor wages.
Second, on the ecological dimension, the literature acknowledges the links between
credit and environmental quality, crop choice and input application, creating adverse eco-
logical pressure (Singh 2000; Narayanan 2015), and more broadly pressure on economic
status and soil quality (Barrett and Bevis 2015). Historically, indebtedness-mediated eco-
logical consequences have been reported in modern France where mounting debts
drove agriculture toward commercialization, and in Scotland where they pressured the
aristocracy into extractive and agricultural activities leading to deforestation (Gerber
2014). Currently, in India, Narayanan (2015) finds that credit facilitates high-input and
mechanized agriculture. She finds that a 10 percent increase in formal credit flow increases
fertilizer consumption by 1.7 percent, pesticide application by 5.1 percent and tractor pur-
chases by 10.8 percent, making agricultural practices highly sensitive to credit. Further-
more, in rainfed agriculture, an intensified demand for tube-wells is tightly coupled to
indebtedness to moneylenders (Fishman, Jain, and Kishore 2013; Pradhan 2013; Taylor
2013). Here, a social ecology of ‘debtscapes’identifies smallholders’attempts to exercise
control over water as central to maintaining household well-being in austere agrarian con-
ditions (Taylor 2013), leading to two consequences: the dramatic expansion of private
groundwater use that disrupts existing forms of collective water management, and
gradual decrease in returns from groundwater irrigation associated with an increasing like-
lihood of tube-well failure. Further, in one of the few studies that explicitly addresses both
social and ecological consequences of credit, Taylor (2014) argues that climate change
adaptation is a fundamentally relational process. Adaptation in this sense is predicated
upon the power of individuals to maintain or change livelihoods under changing social-
ecological conditions, and interactions with other social groups and classes. Lastly, the
commonality between opposing sides of the debate that questions whether agriculture
should spare or share land with conservation is the identification of the detrimental
THE JOURNAL OF PEASANT STUDIES 5
effects of agriculture on the environment (Fischer et al. 2011). Here, increasing input appli-
cation and the associated ‘package of agricultural practices’financed by credit are ident-
ified as causes of environmental degradation.
This review identifies two areas in existing understandings of rural financial landscape,
credit–debt duality, and social-ecological consequences that have received insufficient
attention: the institutions–indebtedness–social-ecological consequences nexus, and
indebtedness as an important root cause
of vulnerability. First, in smallholder agricultural
systems, the nexus is negatively reinforced, trapping smallholders in a state of low well-
being. This negative reinforcement has been implicated in the increasing extreme vulner-
ability of smallholders witnessed by instances of farmer perversities, including suicides
(Sadanandan 2014; Dandekar and Bhattacharya 2017). A nexus-based focus will be
useful because (1) specifying how identified causes of social and economic actions are
linked to consequences explains vulnerability more completely (Blaikie et al. 2014),
thereby (2) enabling a fuller treatment for vulnerability reduction, and (3) it offers a
means to include interconnected challenges in institutional interventions to address
indebtedness, livelihoods and landholdings for the design of synergistic policies.
Second, analysis of vulnerability is challenged by a growing list of root causes including
race, ethnicity, family, gender, age, health, income, class, caste, clan, religion, political
affiliation, livelihoods, socio-economic status, ideologies, institutions, world views, exploi-
tation, marginalization, type of production system, infrastructure status, geographic
location, physical environment and access to it, representation, political unrest and wars
(Bohle, Downing, and Watts 1994;O’Brien et al. 2004; Bassett and Fogelman 2013;
Blaikie et al. 2014; Ribot 2014). However, vulnerability research remains dominated by
explanations that occlude root causes while favoring proximate causes, such as soil fertility
(Barrett and Bevis 2015), temperature (Carleton 2017) and various other forms of water and
resource scarcity (Shah 2012).
2.4. An integrated framework of smallholder vulnerability
This paper develops a framework focused on vulnerability anchored in the condition of a
coupled smallholder system with indebtedness positioned as an important root cause. Vul-
nerability is the susceptibility to damage in the face of monetary and biophysical events,
and adaptive capacity is the ability to secure credit and repay debts.
This framework draws on social-ecological and vulnerability frameworks. First, Ostrom’s
general framework for analyzing sustainability of social-ecological systems (Ostrom 2009)
shows the importance of linkages among social and ecological variables. It has generated
great interest for its ability to organize inherent complexity and identify points of inquiry
that matter most for governance (Basurto, Gelcich, and Ostrom 2013). It has yet to be
applied to the study of indebtedness. Second, vulnerability analysis is divided between
two approaches –risk hazard and social constructivist (Adger 2006; Füssel and Klein
2006; Ribot 2014). These approaches differ fundamentally in the analysis and location of
causes. While the risk-hazard approach evaluates vulnerability as part of multiple
Proximate causes are defined here as causes or unsafe conditions that existed immediately before the event leading to
social-ecological consequences. Root causes are defined as social-structural causes that influence social-ecological con-
sequences independently or by contributing to proximate causes.
outcomes arising from a single climate event, the social-constructivist approach, drawing
on concepts of entitlements and livelihoods, focuses on multiple causes of a single
outcome. While the risk-hazard approach traces vulnerability linearly to the environmental
hazard and places the risk in the hazard itself, the social-constructivist approach traces
causes of vulnerability to multiple social and political-economic factors and places the
burden of explaining vulnerability on the underlying social conditions. Linking these
two approaches, Ribot (2014) suggests a third way where an integrative framing of vulner-
ability includes both biophysical and social factors. This approach is socially rooted and
focused on entitlements–livelihood, tracing the causes of vulnerability from specific
events (Vayda 1983) to explain why a given individual, household or group is at risk
from a particular set of damages. In this approach, analysis places emphasis on tracing
out the causes that enable and disable capacity, and suggests these causes as a productive
entry into a fuller analysis of vulnerability and adaptation (Ribot 2014).
The framework presented here operationalizes this third method suggested by Ribot
(2014). It draws attention to vulnerability anchored in the condition of the coupled small-
holder system, identifies the complexity in linkages and the iterative nature of com-
ponents that contribute to vulnerability, and assists in gathering of data that can be
used for further research and development of policy (Turner et al. 2003; Ribot 2014). Its
construction provides broad classes of components, and linkages among them that
together contribute to the analysis of vulnerability (Figure 1). First, the framework includes
(1) exposure units, here a coupled smallholder system of no more than 10 acres, where
vulnerability resides; (2) credit institutions and access to them; (3) transformation of
credit into indebtedness and obligations associated with each credit institution; (4) recur-
sive links from obligations to smallholder system via social-ecological consequences; and
(5) external shocks and stresses manifested as monetary and biophysical events influen-
cing the exposure unit. Monetary events related to health, death, education and cultural
ceremonies, and biophysical events such as variability in rainfall and temperature, and
pest attacks and droughts, present a household with expected or unexpected expenditure.
Figure 1. Integrated framework of smallholder vulnerability and indebtedness.
THE JOURNAL OF PEASANT STUDIES 7
Second, vulnerability analysis begins by investigating a series of causal links. The
exposure units are examined for damage (here, reduced livelihood and crop choices, free-
doms and decision-making, and more broadly reduced ability to shape the political
economy), which is linked to social security failures (here, failure to protect against persist-
ent indebtedness and associated damages). Next, observed damages and failures are
linked to immediate causes (here, indebtedness to credit institutions) and mapped onto
social-ecological consequences in which the exposure unit is embedded (here, small-
holders practicing rainfed agriculture embedded within the rural credit landscape).
Lastly, mechanisms by which exposed units can influence or are prevented from influen-
cing structures they operate within (here, the indebtedness process that prevents small-
holders from active engagement with political contexts reinforcing vulnerability) are
evaluated. The framework emphasizes that indebtedness causes vulnerability even
when biophysical or monetary events are not present. In autonomous or planned
responses to events or livelihood demands, smallholders access multiple credit insti-
tutions. Upon acceptance of credit, debt is associated with different sets of obligations
which feed back as social-ecological consequences to the focal smallholder system, recur-
sively shaping land and livelihoods though livelihood strategies and agricultural practices.
The following sections illustrate the usefulness of the framework through case studies of
three credit institutions and associated events, obligations and consequences.
3. Study area and methods
The foci of this research are smallholder farmers and their credit sources in the southern
Indian state of Telangana, which witnesses the highest percentage of indebted agricultural
households (Figure 2).
As part of a larger study on institutional dimensions of rainfed agriculture, I studied five
credit sources and their clients between August 2014 and August 2015 (Ramprasad 2017). I
present three pairs in this paper. These pairs (with names changed) are (1) Ramulu (con-
tract farmer) –Krishnappa (contractor); (2) Sayappa (smallholder) –Venkatesh (moneylen-
der/input trader); (3) Sai Rytulu Cooperative (farmer group) –Mahesh (field officer at a
national NGO). I used process-tracing (Beach and Pedersen 2013) and progressive contex-
tualization (Vayda 1983) as guiding themes to contextualize indebtedness within the
credit process and trace its origins and consequences. I observed and participated in
credit transactions, attended group meetings, consulted key informants, and conducted
semi-structured interviews. I situate results within narratives of credit transactions that
highlight the process of indebtedness and its consequences. Villages in the study area
have a particularly good representation of marginalized communities, and all three bor-
rowers belong to backward castes (Golla,Mudiraj,Madiga) and a scheduled tribe
(Lambadi). Lenders and institutional representatives, on the other hand, are upper-caste
Reddy and Komti, and except Venkatesh are not native to the area.
Like the three smallholders, 95 percent of farmers in the area cultivate less than 10 acres
of land, spread over multiple tiny patches. The financial landscape of this area is layered
with public (e.g. departments of agriculture and rural revelopment), civic (e.g. Self-help
Groups, NGOs, primary agricultural credit societies) and market institutions (e.g. RRBs)
that link farmers to credit and inputs. Informal credit institutions include moneylenders,
contract farming agents, agricultural input traders, and members of a farmer’s social
network. The main livelihood of smallholders is rainfed cultivation of legumes such as red
gram (kandalu) and green gram (pesaralu) intercropped with millets (jonnalu) in the kharif
(April and October), and peanuts (phalli) and oilseeds in the rabi season (October to
March). Smallholders with access to tube-wells grow irrigated rice (vari) and vegetables.
Recently, there has been an increase in cultivation of cotton for fiber (patti), and contract
farming of hybrid cottonseed and vegetables.
Supplemental livelihoods in decreasing order of importance comprise migration to
urban areas for labor, rearing small ruminants, local wage labor, and trading non-timber
forest produce. Biophysically, this area is semi-arid with poor red soils (chalka) and few per-
ennial water sources. Rainfall ranges between 500 and 800 mm annually, and farmers
shadow its pattern with their agricultural calendar. Rains also recharge underground aqui-
fers, and determine tube-well output and decisions regarding its improvement or re-
investment. Two patches of scrub forests interspersed with Eucalyptus plantations
provide habitat to small mammals and birds, and fuelwood for households. Other
common resources include village grazing lands and a network of small lakes and seasonal
ponds that support ruminants, cattle and fish farming.
3.1. Credit institution 1: contract farming
Ramulu grows hybrid seed cotton for Krishnappa on two of the most fertile patches of his
land. Over the last eight years, they have had pre-cultivation agreements on the pro-
duction processes and conditions of sale. At the beginning of each season, Krishnappa
specifies input usage and agricultural practices. He provides chemical inputs and credit
Figure 2. Indebtedness of Indian farmers. Source: National Sample Survey Office 2014.
THE JOURNAL OF PEASANT STUDIES 9
for labor and monitors cultivation on his weekly visits. By harvest time, he aggregates
seeds, tests germination rates, certifies quality and organizes the sale of seeds. From
the sale, he deducts input costs and pays Ramulu the rest. On one of his weekly visits
to Ramulu’s field, he notes ‘the women are experts in crossing’, he says with a grin and
within earshot of the women pollinating the cotton plants. ‘The men cross in the city.
These women?’And he grins again. Ramulu offers no protest to the offensive comments
made by Krishna. His silence is surprising since they are said within earshot of women,
including his daughter and daughter-in-law. The women look back at him and glare,
but Krishnappa’s indifferent demeanor suggests that these stares have no consequence.
Krishnappa ‘manages’200 smallholders like Ramulu. He prefers smallholders because
they are less likely to default, are not connected to many institutions, and are less orga-
nized to bargain effectively. As opposed to smallholders, large farmers with more endow-
ments and social connections can ‘take him on’and he can offer no retribution for their
non-compliance of practices. Smallholders are more likely to remain indebted to him
and less likely to do anything about it. Without money for labor and inputs, these
farmers are ‘nothing’. As part of this management, he closely monitors crop choices to
ensure that inputs he provided are not being substituted for other crops. An asymmetric
power difference is on full display as he regularly chides and reprimands, and in extreme
cases even threatens punishments. He says, ‘all I have to do is withhold labor payments for
days to a week, for him [points at Ramulu] to toe the line’. His connections with local elites,
traders and government officials further entrench the power differentials, leaving Ramulu
indebted not just to him but to a suite of powerful social actors.
Ramulu and his family tolerate Krishnappa. He says: ‘a decade ago, I barely made
enough money but owed a lot of money. I sunk four bores [tube-wells], but three failed.
The one on this land is the only functional one and I use it for cotton’. Contracts are expe-
dient for Ramulu because Krishnappa reduces the transaction costs of procuring agricul-
tural inputs and credit, provides technical assistance and access to cotton markets and,
most importantly, stabilizes the price. Ramulu says:
even in a bad year, Krishnappa provides all input costs, and guarantees a break-even return at
the least. I had a bumper crop the second year after I started. I repaid all debts and brought
back my son from Mumbai. He performed coolie [wage labor] there. I got him married. But the
last three-four years have been tough. Rains are scarce and my bore is running low.
At this point, a group of women walk toward the field, with thin towels on their heads and
clutching lunchboxes. Laxmamma, Ramulu’s daughter-in-law, yells across the field: ‘The
day is almost done!’She is in charge of the women who perform the arduous task of cul-
tivating ‘hybrid seeds’. The women hand-pollinate ovaries on every cotton plant from
selected male plants, and emasculate the rest of the anthers. ‘We have to be here every
day from the time plants start flowering to when it stops producing flowers’, Laxmamma
says. ‘If the plants cross themselves [self-pollinate] then the seed quality is not good. We
will lose money’. So saying, she briskly peels off a red label under the seed she just polli-
nated. She is in the third row of a one-and-a-half acre cotton field, and has over 50 rows to
go through. ‘I will get them all by the end of the day’, she says. Taking a yellow male flower,
she peels off the petals and exposes the male anthers. Gently rubbing the anthers on the
ovaries from which she just removed the label, she substitutes natural pollination. ‘This is
crossed now. But this [pointing to a non-hybridized seed] is a “fail”. It is no good’.
10 V. RAMPRASAD
She plucks the non-hybrid seed at its base and discards it. In the next row, a young girl is
barefoot. She is looking for immature seeds and tagging them with a red label, and emas-
These two women are part of a group of six women who
work Ramulu’s fields. A mix of discourse and patriarchy drives the preference of women
and young girls for cottonseed labor. As Krishnappa explains while Ramulu nods,
‘women are nimble and easier to control than men. The wages are lesser, and they
have greater endurance and discipline. No boys or men work the cotton fields. At most
men spray pesticides and apply nutrients’.
Indebtedness to Krishnappa causes social-ecological consequences that influence the
feminization of agriculture, livelihood choices, and a decrease in landholding quality.
First, the positional vulnerability of women becomes apparent as they become targets
of contracts and contractors, experiencing multiple hidden consequences (Rahman
2008; Ramamurthy 2011; Gerber 2013). Women of Ramulu’s household are obliged to
work in cotton fields, and young girls in similar households are embedded with particular
social skills during their upbringing –skills that suggest to them that women are delicate
and have the nimble fingers necessary for cottonseed farming. Laxmamma and her sister-
in-law are told that they work for future gains in their life –education of children and mar-
riage, respectively. While Ramulu fixes monthly wages for Laxmamma and his daughter
with Krishnappa, these are merely for accounting purposes. Even though studies find
that within a contract arrangement, women reported higher self-esteem, self-confidence
and power in the household (Singh 2002), obligations to contractors lead to a decrease in
choices or usurping of choices by other family members. Second, involuntary involvement
in labor and livelihoods is kept in place through indebtedness to contracts. Laxmamma is
obliged to work off the contracts made by Ramulu, who is obliged to honor his contract to
Krishnappa. While she has surrendered her right to refuse labor, he has capitulated his live-
lihood strategies. It is this encroachment on choices by Krishnappa’s contract that make
Ramulu’s household (and his daughter and daughter-in-law) ‘unfree’(Bhaduri 1986; Ven-
kateshwarlu and Da Corta 2001) to refuse labor or opt for an alternative. In this sense, all
the trappings of contracts obligate smallholder households to continue an exchange that
provides better livelihoods at social costs to family members, especially women (Agarwal
1989). Third, intensive farming with chemical inputs has decreased the fertility of his land,
which prevents shifting from cotton to other crops. As one extension officer observes,
‘these lands [cotton farms] have seen much application of urea, DAP [iammonium phos-
phate, a chemical fertilizer] and weedicides [so] that now, organic matter is less, leaching
of nitrogen is more and soil microflora is almost wiped out’. Indebtedness has driven
Ramulu to make crop choices that are riskier than traditional crops and that have
decreased the cropping diversity. Contracts push agricultural practices from intercrop-
ping-based agriculture toward high-input monocrops and associated groundwater exploi-
tation (Taylor 2013).
This case shows the feedback from contractual obligations leading to consequences
and increased vulnerability, and back to contracts (Figure 1), reinforcing indebtedness
to contractors. The indebtedness process reduces the freedom of smallholder households,
with women and young girls disproportionately bearing the consequences through their
Refer to Venkateshwarlu and Da Corta (2001) for a detailed illustration of the cottonseed cross-pollination process, and
Singh (2002) for contract farming in India.
THE JOURNAL OF PEASANT STUDIES 11
compulsive involvement in cotton contracts. Here, disparities caused in freedoms, that are
often not reducible to differential wages or resources (Sen 1992), are explained by indebt-
edness. Indebtedness increases the risk of everyday violence against women and their
exploitation by creditors and household members, exposing the positional vulnerability
of women within households (Rahman 2008). In a male-dominated credit landscape,
women’s access to credit and inputs is limited because of reduced mobility, participation,
and activities outside the home (Agarwal 1989). Further, in support of the few studies that
explore the contract farming and environment relationship (Siddiqui 1998; Singh 2002), I
find that contract-mediated indebtedness leads to a decline in the environmental quality
of landholding through overexploitation of land and groundwater. Intensive use of chemi-
cal inputs and associated decline in soil fertility leads to loss of agricultural alternatives and
reinforces indebtedness to contractors.
3.2. Credit institution 2: moneylenders and input dealers
Incense burns steadily, but the smell of chemicals powers through it. ‘I burn three to four
every day’, Venkatesh says as he settles into his office-cum-godown (storage area). His
family has been in the lending business for over four centuries. From his desk drawer,
he pulls two stacks of notecards that record his intimate knowledge of clients. ‘In this
business it is necessary for me to know what is happening in my client’s life. Who is
getting married, who is unwell, who bought buffaloes, how their crops are doing, how
their children are studying. This information is key to understanding whether a person
is reliable’. He points at the thicker stack: ‘These are OK’. The smaller stack he says are
‘kiri–kiri’(troublemakers). They are ‘political’, he complains. ‘I am obliged to provide
money to them. Whether and when I will get it back is uncertain’. Two clients walk in:
an elder man, Sayappa, resident of a neighboring village, and his son Ramesh. Venkatesh
barely looks at them and does not stir from his desk. He looks for their card, deftly locates
it, and scribbles a few numbers and letters. Ramesh reminds Sayappa of the payment that
needs to be made by pointing at a small blue book. This book is the moneylender’s equiv-
alent of a bank passbook. Sayappa digs into a secret pocket in his undershirt, retrieves a
thick wad of currency and hands it to Venkatesh. As the pair leave, Venkatesh says: ‘debt is
their existence, but only a few of these debts are monetary’.
Sayappa’s debts to Venkatesh extend beyond cash, and bundle information and
resources to credit. With market prices being notoriously fickle, he is in close contact
with Venkatesh during harvest. ‘I ask setu [a rich man, here meaning Venkatesh] before I
sell, if this is a good price. I take his advice on which seeds to purchase, inputs, and
even call him on my mobile phone if I observe any problems with crops’. Every season,
he bundles credit with agricultural inputs and technologies. He does so for two broad
reasons. First, the transaction costs of separately approaching moneylenders and input
traders are decreased or eliminated. Second, lenders like Venkatesh offer greater
support to clients since repayment is tied to crop yield, and provision of better information
and inputs buffers them against farmer losses. As Sayappa says, ‘a few lenders now send
agriculture graduates to check on fields and offer advice’. Bundled credit assists Sayappa
to navigate the temporal fractures of input expenses that do not align with unpredictabil-
ity of rains, agricultural inputs provided by the formal sources such as the agricultural
department, and incomes.
12 V. RAMPRASAD
Even though Sayappa’s relationship with Venkatesh appears to contradict the image of
the usurious and tenacious moneylender (Shah, Rao, and Shankar 2007), his obligations
suggest ways in which trader–moneylenders continue to wield power over smallholders.
Sayappa is obliged to purchase predetermined seed varieties and crops, and sell to chosen
traders. For example, Venkatesh explains:
neither does the MRP [maximum retail price] reflect the true value of a product nor does the
market price. Look at this bag [of rice seeds]. It is made by an Indian company and yields about
30–40 bags per acre if grown ‘well’. Its MRP is INR 1080. We get this bag for INR 500. I add
between INR 50 and 100 as a profit. My competition is not for how much I sell each bag,
but how many I sell compared to other dealers in the area. With the gap in MRP and trader
price, a farmer without [intimate] knowledge or relationship [with me] is likely to get
skimmed. The government does its best to provide seeds. But it is hardly sufficient. Two
years ago, there was a riot for phalli offered by the Department of Agriculture and the
police were called in. The government supply barely meets the demand.
In the context of cottonseed, he adds:
several traders in Mahbubnagar sell cotton seeds at INR 100–200 less than the market. Farmers
flock to them and get seeds on credit. The seeds fail to germinate since they are spurious and
they miss the rain. The traders blame farmers for not following ‘proper practices’. Now, farmers
have two options: buy new seeds and risk it all or plant pesarlu. Traders will not return their
money, and their investment is dead. So, it is better for farmers to get credit, inputs and all
other requirements from me. That way, they have some insurance.
For Sayappa, under the prevailing credit conditions –as narrated and propagated by
lenders –Venkatesh is the better option even though it is associated with a loss of
choice and bargaining power. In his transactions with Venkatesh he asks for crop
choices and varieties merely in passing. He understands that Venkatesh already has a
plan for him –with reduced choices and likely decisions as well. For example, his neighbor
planted a new variety of high-yielding and pest-resistant ‘Indo-American’cotton that cost
over INR 1200 per bag. When he asked Venkatesh for that brand, he was refused and
offered the more popular local brand ‘Mallika’. He was told that he ‘could not afford it’.
What this means to Sayappa is the demeaning process of valuation of the self by a
person to whom he is obliged. If he were not indebted, he would have ‘protested and
demanded whatever brand he wished of whichever crop’. He adds:
I belong to the backward caste [BC]. How can I grow crops I want? I do not have water, and
rains were my only source. Others in my village received free bores but not me. These bores
are for scheduled caste [SC] and scheduled tribe [ST]. I want to continue agriculture but where
shall I get the money for the bore? I had to ask Venkatesh, who tells me what I must grow. My
son is now able to take care of agriculture, but with his young family, my pension being stuck
in the government, and not much returns over the last two years, we have relied on setu.My
father borrowed from his father, and now my son goes to him.
This case shows the indebtedness-mediated reinforcement of vulnerability and perpetu-
ation of disadvantage exercised through access to information, livelihood security and
crop choices (Figure 1). First, credit bundled with information and predetermined inputs
functions as opportunity hoarding (Tilly 2001), where moneylenders conﬁne the use of
a value-producing resource –here, high-value seeds and technology –to members of
an ‘in-group’based on estimates of self-worth. While deliberate attempts to subordinate
THE JOURNAL OF PEASANT STUDIES 13
marginalized groups are absent, opportunity hoarding cements unequal categories via
credit transactions that bar access to economic opportunities (e.g. increased yield by
using better seeds) to the lesser of the borrowers. Sayappa’s understanding of the subtle-
ties of his indebtedness has normalized the denial of experiences (and associated net-
works and beneﬁts) and effectively stabilized his horizon of achievement. This
diminishment of his ‘capacity to aspire’(Appadurai 2004) manifests itself as powerlessness
in transactions and a lack of alternate choices, reinforcing impossibilities of livelihood
enhancement. Second, indebtedness-mediated reduction in sovereignty –the right of
farmers to shape agricultural systems –positions credit to design agricultural practices,
crop choices and income from sale of harvest. Indebtedness leads to power over the
social-ecology of agricultural systems through control over information and inputs. It cir-
cumscribes the boundaries of production and selects what gets included within. Third,
indebtedness is reinforced by dependence on moneylenders for technical knowledge
due to voids left by insufﬁcient agricultural extension. This dependence makes farmers
unable to independently source agricultural inputs and credit, and to develop creative
adaptive strategies for impacts of climate change. In a highly linked credit landscape,
pre-packaged ideas of agricultural adaptation sourced by moneylenders resist innovation
uptake, which could explain why development efforts may become ineffective (Sarap
3.3. Credit institution 3: local institutions, bank–NGO linkage
With the arrival of the six bank officials and the NGO officer in charge of the area, the
meeting is ready to start. Some 50 male and six female farmers, members of the Sai
Rytulu Cooperative, are gathered at the women’s cooperative office, a large cement-
colored building with unfinished floors and interiors. On seeing the procession of cars
and exchanges of pleasantries by Mahesh and his NGO colleagues, the gathered people
become a little less restless. Three of the officials are young and are on their first field
visit, or ‘exposure visit’in development vernacular. One of the other officials, a woman,
is the liaison between the bank and the NGO officer in charge of the area. The fifth
bank official, a middle-aged man familiar with the area, is one of the two people who
can communicate in Telugu, the other being the director, a senior official, well dressed
and quiet. The NGO staff and the gathering follow his every move. Mahesh then calls
for the attention of the group, and of the farmers by clapping his hands and speaking
in a loud voice: ‘we are honored to have the director of the national bank here with us.
He has been instrumental in providing loans to your clubs over the last two years’. The
director sips from the bottled water, and looks at the experienced officer, who starts by
asking the gathering about their loan status and how many members have received
loans. The farmers look toward the NGO staff. Mahesh consults his book and answers,
‘266 members in 19 groups’. He adds, ‘out of 760 members in 41 groups federated at
the mandal level as a cooperative’. The farmers nod. ‘How often do you repay?’
‘Monthly, and we will have paid all dues including the principal by the end of the year’.
As Mahesh begins to introduce activities of the NGO conducted by the 41 groups, one
of the young officers interjects, ‘How do you select groups that will receive the loan? And
how do you manage risk of defaulters?’The director looks at the NGO staff, who in turn
translates the question from English to Telugu. There is a long silence. Mahesh repeats,
14 V. RAMPRASAD
‘Say, how do you select the members and groups?’Still nothing. The farmers look for leads
and as an NGO staff member seated in the audience says ‘we conduct a general body
meeting every year and we decide then’, they trail the answers and nod in agreement.
‘But how are the groups and people selected for loans?’A senior NGO officer, to whom
Mahesh reports, answers: ‘We have a set of parameters in the by-laws of the cooperative:
group age, regularity of meetings, transactions every month, internal loan structures, and
outstanding payment. The cooperative selects groups based on that’. Drawing the group’s
attention back to NGO activities, Mahesh adds, ‘overall, 15 activities are channeled through
the groups’. Two farmers, the president of the cooperative and the head of the ‘kuruvalu’
(shepherd) sub-group, reel out names of programs and activities. The officers are
impressed. Extolling the virtues of saving and increasing increments, the experienced
officer says, ‘Today you save 10,000 and receive 200,000 loan; tomorrow you save much
more and will be allotted over 500,000 in loan. Show us that you save and repay, and
we guarantee an increase in loan allocation’.
Indebtedness that follows the bank loan (and even the potential bank loans to un-
indebted groups) is the instrument that NGO staff use to incentivize its other 14 activities.
Broadly, these activities fall into four categories: livestock- and fisheries-based livelihoods,
agricultural practices and marketing, natural resource management, and welfare. Further,
these activities are only possible with the NGO’s expertise to align procedures and paper-
work across multiple institutions. For example, the 41 groups are federated under a coop-
erative law, which permits procurement of seeds and fertilizers for sale to members at
discounted rates, and aggregation and sale of kandalu under a ‘pesticide-free label’.
While seed and fertilizer sale requires licenses by the agricultural department, the pesti-
cide-free label is offered by a certifying agency. These links are leveraged as ‘bringing
benefits to farmers that are additional to loans’.
It is in these activities that social-ecological consequences of indebtedness become
evident –activities championed by NGOs and practiced by farmers. Mediated by NGOs,
livelihood strategies (e.g. chicken and goat rearing), crop choices (e.g. introduction of
quinoa), agricultural technologies (e.g. soil fertility enhancement through silviculture
and composting, sustainable development of rice systems through system of rice intensi-
fication, SRI) have effects at lager scales that span administrative boundaries. Targeted in
multiple villages from a ‘watershed unit’to ‘cluster approaches’depending on program
goals, development of multi-village agglomeration leads to broader ecological conse-
quences. For example, Mahesh’s NGO promotes soil fertility treatments and SRI in contig-
uous agricultural fields. He brings together multiple farmers who own portions of large
tracts within a landscape unit, a watershed for example. For SRI, the goal is to convert a
third of the current 4500 acres under paddy, and farmers with contiguous fields receive
greater NGO attention and persuasion since they lend more easily to the ‘cluster
approach’. In other cases, groups of farmers dig pits for composting, plant fast-growing
trees for composting, clear shrubs and rocky areas, and construct check dams for moisture
retention. Further, smallholders are screened for qualification into programs based on cri-
teria such as current livelihood or tribal status. For example, Mahesh’s staff maintain a
running list of farmers labeled ‘POP’, or poorest of the poor, in their project area. When
new support opportunities (e.g. adaptation funds from international agencies or a govern-
ment scheme that promotes a local goat breed) arise from interplay of his NGO with other
institutions, Mahesh directs these activities to a subset of the POPs, effectively linking
THE JOURNAL OF PEASANT STUDIES 15
them upstream to funders and government departments functioning at multiple levels.
Participation of POPs and marginalized groups in regular meetings and more organized
meetings, as narrated above, serves only as an authentication mechanism where detailed
records of participants’attendance in meeting minutes disguise their ignorance of insti-
tutional function, of which they are allegedly beneficiaries.
While a linear indebtedness process from NGO–bank linkage to smallholder conse-
quences is readily apparent, a close examination suggests a recursive feedback as well.
This back loop is revealed in activities that are not popular with the farmers, but have
high impact points for the NGO with donors and the government. Two examples of
these activities relate to a technology and a practice. First, non-pesticide management
technology (NPM) is the core idea of the pesticide-free label, where organic pesticides
with powerful names such as ‘neem astra’–weapon (astra) sourced from neem tree (Aza-
dirachta indica) leaves and cow urine –substitute for chemicals. Farmers, however, com-
plain of the impotency of astras making crops more susceptible to pests. Second, the
use of local seed banks exhibited to donors is accessed only by a handful of farmers
and for popular varieties of commodity crops. NGOs consequently trade lofty conservation
goals for low-level operability. Farmers broadly understand that these practices are less
intensive on the environment and are theoretically sustainable, but are unwilling to com-
promise yields and returns. When they do follow these practices, they hold NGOs under
debt. As Mahesh says:
I am not sure sometimes who is indebted to whom. We provide the technology, inputs and
even credit. But I need to be ‘on their case’constantly and plead with them to continue
these practices. NPM is not popular and some farmers spray pesticides anyway. The seed
bank is barely ‘alive’. It was an offshoot of an external grant with the aim of conserving
local seeds and genetic diversity. It stocks only the popular varieties, of two-three crops.
Now, with low landholding, how can I meet my annual target for NPM acreage and seed pur-
chase in the area? I have tried all kinds of negotiation –from requesting to threatening them
with withdrawal of loan. Nothing seems to work. When international donors and certifying
agents stop by, I need to call ‘select’farmers who are more in tune with our activities to
display these activities and provide samples that are likely to pass the certification tests.
This case shows the complexity in indebtedness relationships between NGOs and their
constituency that manifests as structured behavior and participation in activities, liveli-
hood strategies and agricultural practices, leading to vulnerability effects (Figure 1).
First, interactions between remotely based formal creditors and smallholders mediated
by local institutions leverage indebtedness processes to implement interventions. Small-
holders and NGO are both indebted to each other with recursive feedbacks inﬂuencing
consequences. Credit creates opportunities for advancement of activities and meeting
targets for ofﬁcers like Mahesh as processes of increasing legitimacy of his NGO. On
one hand, selective sampling of pulses for pesticide tests, and maintenance of showcase
projects, point at indebtedness of institutions to smallholders. On the other hand, indebt-
edness motivates smallholders to collude with institutions to subvert beneﬁts to a select
group. This indebtedness process could help in better understanding the collaborations of
convenience observed in watershed development between government ofﬁcials and vil-
lagers (Baviskar 2004). Second, smallholders indebted to NGOs also have the potential to
receive other beneﬁts that the NGO provides. These positive externalities serve small-
holders as they seek to diversify their livelihood portfolio and include opportunities to
16 V. RAMPRASAD
reduce risks. Selective targeting of vulnerable individuals for resource and information
needs shows how local institutions could use the indebtedness process positively to
create conditions conducive for adaptation. Third, indebtedness is used to sustain agricul-
tural practices that could be critical to adaptation. In maintaining even stagnating inter-
ventions such as NPM, local institutions show the strength of indebtedness as a
mechanism by which local institutions become critical conduits of innovative practices.
This case supports studies recognizing that adaptation strategies at the local level are
closely linked to livelihoods of households, with critical assistance provided by local insti-
tutions (Agrawal et al. 2010).
4. Discussion: indebtedness and vulnerability
Indebtedness through its social-ecological consequences functions as a key root cause of
vulnerability, weakening the ability of smallholders to bargain for a fair deal. It prevents
them from acquiring wealth beyond mere subsistence levels or engaging in political pro-
cesses that shape their well-being. It explains more fully the mechanism by which small-
holders are prevented from influencing structures they operate within and those who
govern (Ribot 2014). The cases show how vulnerable groups come to lack capacity, own
inadequate assets, and fail to create adaptive strategies. While biophysical and life
events (Figure 1) can be surprising, indebtedness, when framed as a cause of vulnerability,
persists in plain sight.
As a debilitating position, indebtedness fails smallholders as they articulate their inter-
ests and oppose those that work against them. Under persistent indebtedness, small-
holders, marginalized borrowers and women will likely resort to decisions that are not
in their best interest. Accounting for these causes and interlinked indebtedness will go
beyond visible outcomes of programs. And one way to account is by addressing the con-
sequences of indebtedness caused by a complex interplay of social and ecological factors
that are not readily apparent under current framings of rural credit and indebtedness.
These consequences of indebtedness mark boundaries (e.g. credit/debt, as evidenced in
all cases), exclude people (demonstrated in the case of the moneylender), and give impor-
tance to social identity (e.g. women in cotton contracts, POPs in the bank–NGO linkage,
and caste-based identification across all cases). Driven by necessities to adapt and
reduce risk, smallholders’continued access to exploitative credit sources reinforces their
vulnerability. Indebtedness serves as a process that makes inequality (and poverty more
generally) durable (Mosse 2010), whose effects are long lasting due to its operation
across scales and in non-intuitive ways. For example, the case of NGOs being indebted
to their smallholder constituency suggests a different side of debt where those with the
power of offering credit are indebted to potential borrowers.
For future research and policymakers, this contribution has three offerings. First, this
paper highlights the variations in credit sources and associated obligations, and empha-
sizes that smallholders access multiple sources simultaneously. As depicted in Figure 1,
multiple sources of credit accessed by a household come with variations in obligations,
leading to different social-ecological consequences. I coined the term ‘credit stacking’
for this accessing of multiple credit sources. While intuitively understood, credit stacking
is an important adaptation strategy that is overdue for a comprehensive examination. We
do not yet understand the joint effect of indebtedness stemming from access to multiple
THE JOURNAL OF PEASANT STUDIES 17
credit sources and how they trade off consequences. While this study reveals the tangible
effects of credit/debt in practice, it only hints at the ways that smallholders negotiate
between different lenders and the impacts this has on livelihood- and landholding-
related decisions. This call to research contributes to Lazzarato’s(2012) point that analysis
of credit/debt requires development of theoretical tools, vocabulary and concepts for the
analysis of the economy that are currently lacking.
Second, climate and adaptation finance is emerging as one of the main instruments of
international climate negotiations. In parallel, bilateral and multilateral donors have con-
tributed to the integration of vulnerability-reduction measures in development assistance.
However, only a limited scholarship reaches below to local levels to observe implications
of these instruments where vulnerability resides (Barrett 2013). As this paper shows, avail-
ing of credit influences livelihood strategies and agricultural practices, and provides a
means of addressing climate variability and risks. Nevertheless, power relations within a
rural credit landscape negatively affect the vulnerable, determine access to funds and
assign obligations. The framework and cases presented here could serve as an entry
point to the analysis of implications of funding interventions. It can do so by expanding
its scope to include nexus components such as formal and informal sources of credit
that are outside the focus of study but influence households, and identify potential feed-
backs between credit interventions and consequences that influence vulnerability.
Third, the problem of smallholder indebtedness and its role in the production of vulner-
ability has outlasted numerous theoretical perspectives. The framework of this paper
identifies areas of research that could build on earlier efforts by aligning credit as a
factor of adaptive capacity and indebtedness of vulnerability. This alignment will enable
us to reframe the recalcitrant problem of smallholder vulnerability by asking: How and
why do some individuals maintain the ability to adapt despite being indebted? Answering
this question will require a focus on the interaction between biophysical and monetary
events with the indebtedness process, as suggested in the framework (Figure 1). At
these interaction or ‘coping points’, variations in the indebtedness process may alter
risks associated with climate and monetary events, potentially separating individuals
who develop abilities to adapt from those who become vulnerable.
This work is the consequence of several debts. The first is to the two anonymous reviewers whose
suggestions have greatly improved the paper. I owe thanks for fieldwork support to friends and col-
leagues at The Watershed Support Services and Activities Network (WASSAN), especially Kumar,
Ramu, Laxman, Bhagyalaxmi, Ravindra, and Ramchandrudu. Several farmers, government and
bank officials and NGO staff, who will remain anonymous, offered as much time as I wished for
numerous enjoyable discussions. Special thanks to Suhas Bhasme, Ashwini Chhatre, Forrest Fleisch-
man and Pushpendra Rana for reviewing early drafts, Varun Goel for assistance with indebtedness
survey data, and Jesse Ribot for challenging me to develop arguments around abilities and vulner-
ability. I thank the RRA Summer Fellowship at the Indian School of Business and the Graduate College
Dissertation Grant at the University of Illinois for offering the possibility to write this paper.
No potential conflict of interest was reported by the author.
18 V. RAMPRASAD
Note on contributor
Vijay Ramprasad is a post-doctoral associate in the Department of Forest Resources at the Univer-
sity of Minnesota. His work broadly focuses on governance for environmental sustainability and
societal well-being in less-developed regions. To this end, his research aims to create usable
science relating to livelihoods of farmers, sustainability of agro-ecosystems and forests, and adap-
tation to impacts of climate change.
Vijay Ramprasad http://orcid.org/0000-0003-2636-0090
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