Debt Bondage in India - UCF Global Perspectives and International Initiatives

On March 31, 2022, the Indian Government lifted all Covid-19 restrictions (Business Today, 2022). Despite that decision, millions of migrants or “informal” workers in India are still locked in exploitative debt bondage arrangements at increasing levels. Despite supposed government intervention this Human Rights crisis has only deepened due to the effects of the Covid-19 pandemic.

India had a strict and quickly implemented quarantine and lockdown policy, and as the national lockdown started, work abruptly ended for millions. Migrant workers in bigger cities were forced to pack buses, trains and even walk back to their home villages (The Guardian, 2020). In order to assist the migrant workers and India’s significant population living below the poverty line, the government announced that it would provide around 1.7 trillion INR (USD ~ 22 billion) in food and aid (KPMG, 2020), with an additional ~ 4 billion USD in a welfare fund for Covid-19 relief, specifically for migrant workers, construction workers, and daily laborers (Thomas Reuters Foundation News, 2020).

Unfortunately funding for this program has not been allocated consistently and many workers have not received the money that the Indian Government has promised (Reuters, 2020). As money got tighter, many had to resort to taking out more loans and turning to jobs in industries where debt bondage is common. Workers taking out loans during the pandemic faced high rates of defaulting and had to resort to bonded labor arrangements, perpetuating the debt cycle further (Reuters, 2020).

Debt Bondage, also known as bonded labor, is the process of tricking or pressuring workers into exploitative work arrangements where they accrue huge debts to their employers because of loaned money or through exorbitant recruitment fees. In order to pay off those debts, employers force workers to work long hours in often physically demanding or unsafe conditions until the debt is paid off. In India, debt bondage occurs frequently in brick kilns, mining, agriculture (sugarcane specifically) and textile factories (Anti-Slavery International). It is considered a form of modern slavery because the nature of these debts ensnare families and generations as workers are not given any insight into how to properly pay them back, with very little idea of how large their debt is and how much they make daily. (Anti-Slavery International). Any dissent in this arrangement leads to beatings and even increases in the debt owed. (Borgen Project, 2021).

Bonded labor has historical and traditional implications throughout the world, but within India specifically, the system is proliferated through a combination of:

A large number of poor, indigenous and migrant worker populations (historically the groups most vulnerable to debt bondage),
little government oversight and intervention
the remains of the caste system and colonialism enforcing social roles and limiting access to education, affordable housing, and basic financial services like bank accounts and loans (Borgen Project, 2021).

This inability to take out loans contributes to these populations being vulnerable to debt bondage through predatory loan providers, which charge high interest rates.

In Indian migrant worker and rural populations, daily life revolves around these loans and various stages of debt, as labor is often the only capital that workers can bargain with. Weddings, funerals, emergencies, and daily life expenditures are paid for by loans from private money lenders. Specifically, the dowry system in India perpetuates this cycle further as women are expected to gift their future husbands and future in-laws with durable goods, jewelry, money, and other lavish gifts as an expectation of marriage (BBC, 2021). Through this system, many workers and families are trapped in consistent cycles of debt. If parents cannot pay the debt, children are sent to pay it in their stead. Children are especially vulnerable as they inherit their parent’s debt and have even less of a voice in negotiation matters (Borgen Project, 2021)

India has the highest estimated number of modern slaves in the world (World Population Review, 2023). Bonded labor in India has been in the spotlight through various NGO efforts and new laws passed by the Indian government. Specifically, the Indian government unveiled a bold statement in 2016, setting a target of “rescuing 18 million workers from bondage by 2030” (Reuters, 2020). The pandemic has severely derailed those plans, however, as the Indian government had to temporarily abandon that initiative to focus more on public health issues and vaccinations. As a result, no significant progress has been made to mitigate the issue of debt bondage. The pandemic only exacerbated this already existing problem.

Additionally, a good percentage of workers do not even want to return to their former jobs or leave their positions in bonded labor, even when contacted by representatives from human rights groups (Times of India, 2021). The reasons include, already being trapped in complex debt cycles because aid money ran out too fast, not trusting further government or NGO support, or simply not wanting to return to home villages because there are no other feasible employment opportunities (Reuters, 2020).

The International Labor Organization and UNICEF have also reported a rise in child labor exploitation since the start of the pandemic (UNICEF, 2021). This most likely stems from economic pressure due to Covid-19 related job loss. The Indian Government has asserted a continued effort to combat this crisis (specifically in child labor exploitation) (US Department of Labor, 2021), however many Human Rights organizations document rising cases of people entering debt bondage as well as a concerning trend in children leaving school due to the effects of the pandemic and not returning afterward. There are efforts from NGOs such as… but the Indian government hasn’t yet announced any initiatives or funding to combat this issue. If there was more reliable government assistance, laborers and migrant workers may be able to provide better for their families, making sure that more children stay in schools and workers are given more time to find legitimately paying jobs.