Contextualising credit transactions in artisanal marine fshing: insights from Kerala, India

Abstract

The paper investigates the nature of credit transactions in artisanal marine fshing in a developing economy by analysing the case of Kerala, a south Indian state of India. The study examined the structure of credit in marine fshing and its composition; interlocked credit-market and credit-labour transactions; segmentation of credit market; interest rate variations, and the potential reasons for high penetration of informal credit in marine fsheries in the background of a relatively better developed formal fnancing system in sectors outside fshing. The study concludes that the risk-sharing role of the informal credit in addressing the high variability of the income stream in marine fshing and the failure of the formal system to develop credit products internalising the risk element perpetuates the informal credit dominated by output-credit interlocking between fshers and auctioneer-creditors. While the fshers share the risk of high variability in income stream through the sharing arrangement, the auctioneer-creditors are assuring the fow of fsh to be auctioned. However, the system is not without “exploitative elements” triggered by the monopoly power of stakeholders, particularly auctioneer-lenders. The traditional “triadic system” involving fshers, auctioneer-lenders and the society as regulators of trust that sustained the informal credit system is weakening due to extraneous forces. The study highlights the need to have credit products that bundle insurance.