Localized estimates of the incidence of indebtedness among rural households in Uttar Pradesh: an application of small area estimation technique

Socioeconomic conditions exhibit significant variation at higher levels of spatial disaggregation, yet these have not received much attention in the economic and statistical investigations in terms of their identification and prioritization for targeting of efforts and investment. Applying small area estimation (SAE) approach, in this paper we have generated estimates of the incidence of indebtedness among social groups across districts of Indian state of Uttar Pradesh. The findings show that the estimates from SAE are more precise and representative of the spatial heterogeneity in the socioeconomic conditions than do the direct survey estimates. Such estimates of spatial inequality in the incidence of indebtedness provide useful information to financial institutions to develop financial products and services suited to the marginalized regions and social groups; and to policymakers to take appropriate measures to address the problem of agrarian distress which is often attributed to the indebtedness.