A study of obligatory and contingent expenditure patterns and resultant indebtedness in the urban informal sector

Ghazala Ali Khan ()
Additional contact information
Ghazala Ali Khan: Pandit Deendayal Upadhyaya National Academy of Social Security (PDNASS)

SN Business & Economics, 2023, vol. 3, issue 3, 1-21

Abstract: Abstract Socially mandated expenditures on occasions like weddings and death rituals are unique to the Indian socio-cultural milieu, and are often excessive, being disproportionate to poor families’ income and earnings potential. Combined with economic shocks like illnesses, loss of jobs, or death of the principal bread earner, these expenses serve as major setbacks to economic stability, often leading to borrowings and incidences of high indebtedness. This study examined the social expenditure patterns and outlays, vis-a-vis earnings and savings, among poor informal sector workers in urban settings, and tried to find out the extent to which obligatory and contingent expenditure was responsible for indebtedness, and whether the cost of debt was mediated by informality of occupation. The study found that disproportionate spending beyond earning capacity was the cause of indebtedness and compounding penury among the respondents. Comparing the prevalence and cost of debt with formal sector workers in similar income brackets, it concluded that though the extent of indebtedness did not vary by the formality of occupation, high-cost debt was the norm in the informal sector but not in the formal sector.

Keywords: Informal sector; Urban debt; Contingent expenditure; Obligatory expenditure patterns; Unregulated credit; Debt trap (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s43546-023-00425-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:snbeco:v:3:y:2023:i:3:d:10.1007_s43546-023-00425-4

Ordering information: This journal article can be ordered from
https://www.springer.com/journal/43546

DOI: 10.1007/s43546-023-00425-4

Access Statistics for this article

SN Business & Economics is currently edited by Gino D'Oca

More articles in SN Business & Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().