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

The paper investigates the nature of credit transactions in artisanal marine fishing 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 fishing 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 fisheries in the background of a relatively better developed formal financing system in sectors outside fishing. The study concludes that the risk-sharing role of the informal credit in addressing the high variability of the income stream in marine fishing 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 fishers and auctioneer-creditors. While the fishers share the risk of high variability in income stream through the sharing arrangement, the auctioneer-creditors are assuring the flow of fish 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 fishers, 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.