Credit Constraints and Rural Migration: Evidence from Six Villages in Uttar Pradesh
Credit Constraints and Rural Migration: Evidence from Six Villages in Uttar Pradesh

Summary/Abstract: Rural economies in developing countries are often characterized by credit constraints. Various studies confirm that rural labor migration in developing countries is an outcome of capital market imperfections. Lack of easy accessibility to credit followed by exorbitant rate of interest charged by informai sources of credit worsens the condition of poor households. LIttar Pradesh is among few most backward states of India and exhibits highest rate of male out-migration among all states (NSSO). Although few attempt have been made to understand trends and patterns of male out-migration from LIttar Pradesh (LIP), there is dearth of literature on linkage between credit accessibility and male migration in rural LIttar Pradesh. The current study tries to fill this void. Objective of the study is to assess the role of credit accessibility in determining rural male migration. To meet the objective and to have better understanding of the role played by credit constraints in migration decisions, the study undertake primary survey of 370 households in six villages of Jaunpur district in LIP. Simple statistical tools and binary logistic regression model have been used. The result of empirical analysis shows that accessibility and various sources of credit play very important role in male migration in rural LIP. Study also found that relationship between credit constraints and migration varies across various social groups in LIP. Thus more financial inclusion shall be encouraged in rural LIttar Pradesh and an attempt shall be made to ensure easy access of credit to rural households. Various ongoing schemes on financial inclusion shall be more properly implemented and encouraged among rural households to prevent them from various kinds of exploitation by local moneylender.

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