From Peripheral Populations to Financial Fiefdoms: A Case Study from Southern India

India is undergoing a crisis of over-indebtedness. Peripheral populations increasingly rely on loans to meet their basic survival needs. Drawing from a survey of 200 women borrowers in Pondicherry, alongside secondary data from the Reserve Bank of India, microfinance industry reports, and balance sheets of microlending institutions, this paper argues that contemporary indebtedness operates as a zero-sum game. Multiple actors including microfinance institutions, and their investors derive material benefit from the persistence of household debt, while borrowers experience declining economic security and limited avenues for exit. State and regulatory frameworks actively facilitate the expansion of both public and private credit as substitutes for meaningful employment and welfare provision, thereby shifting the burden of commodified social reproduction onto borrowers themselves. Despite contradictory evidence, microfinance continues to be promoted as a vehicle for financial inclusion, women’s empowerment, and poverty alleviation. The paper demonstrates that this debt-driven notion of development only benefits the wide range of investors who are profiting from the rent extraction of vulnerable, peripheral populations, further reproducing inequality.

Cite as: Balasubramanian, P. (forthcoming). From peripheral populations to financial fiefdoms: A case study from Southern India. Economic and Political Weekly.