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The question of indebtedness in the context of rural India has always been viewed as a problem rather than as a precursor of prosperity. This is so mainly due to the transcendence of the deficit nature of rural family budgets especially the small holding agriculturists and all other farmers having poor means of income. The unpredictable weather, the burden of old debt, a long time gap between expenditure and income from farming activities, the small size of land holdings, unproductive spending on social-ceremonies, a high rate of illiteracy are some of the important factors responsible for the agricultural indebtedness in India. If debt is used only to meet the deficit in family budgets and is not utilize for productive purpose, it will entail a dangerous outcome.