Report of the Royal Commission on Labour in India

Bibliographic data

Monograph

Identifikator:: 1850495947

URN:: urn:nbn:de:zbw-retromon-233603

Document type:: Monograph

Title:: Report of the Royal Commission on Labour in India

Place of publication:: London

Publisher:: His Majesty's Stationery Off.

Year of publication:: 1931

Scope:: xviii, 580 S.; graph. Darst., Kt.

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XIII. - Indebtedness

Collection:: Economics Books

224 CHAPTER XIIL—INDEBTEDNESS. The Burden of Debt. Among the causes responsible for the low standard of living of the worker, indebtedness must be given a high place. Here, as elsewhere, we are confronted with an absence of reliable statistics, but there is general agreement as to the main fact, and we are satisfied that the majority of industrial workers are in debt for the greater part of their working lives. Many, indeed, are born in debt and it evokes both ad- miration and regret to find how commonly a son assumes responsibility for his father’s debt, an obligation which rests on religious and social but seldom on legal sanctions. Many come to industry because they are in debt ; some are enabled by industry to clear themselves and a few then become money-lenders instead of money-borrowers. More often the debts remain and fresh obligations are incurred. It is estimated that, in most industrial centres, the proportion of families or individuals who are in debt is not less than two-thirds of the whole. We believe that, in the great majority of cases, the amount of debt exceeds three months’ wages and is often far in excess of this amount. We are not including in debt, for the purpose of these calculations, the amounts owing for the ordinary purchases of the month, which are generally made on credit. Interest Rates. A debt of even one quarter of a year’s wages is a heavy burden, particularly to a man whose income is little more than sufficient for bare necessities. But the burden is aggravated out of all proportion by the rate of interest which has to be paid. A common rate is “ one anna in the rupee”, 4.c., one anna per month on every rupee borrowed, and this was a rate frequently cited to us in our tours. This is 75 per cent per annum, without allowing for the effect of compound interest. For the man who is only three months’ wages in debt, the “ anna in the rupee ” rate involves a monthly charge of nearly 20 per cent of wages, on account of interest, apart from the usual obligation of repaying instal- ments of the capital. Lower rates are frequent, particularly on loans with security, but they are often associated with stringent conditions as to the repayment of the instalments. Much higher rates are also charged, 150 per cent or more per annum being by no means uncommon. Frequently the nominal rate is not the real one. For example, money may be borrowed with an addition to the debt of 25 per cent for the year’s interest, on an agreement that capital and interest will be paid off in twelve equal monthly instalments during the year ; here the actual rate of interest is nearly double the apparent rate. We add a few illustra- tions of these from various sources. The Bombay Labour Office, in its report on working class budgets in Ahmedabad, observes “The Ahmed- abad worker is heavily indebted. The amount of debt varies from a few rupees to many times the monthly income. The money is borrowed at heavy rates of interest which in the majority of cases vary from 12 to 24 per cent. But higher rates of interest are not uncommon, and in

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