The great majority of the population in colonial and postcolonial India lived in the countryside and were poor. Many were unable to find gainful work outside agriculture and remained dependent on a livelihood that provided only subsistence, and a precarious one. The pervasive high cost and shortage of capital affected the peasant’s ability to invest in land, and in turn, the productivity of land was small and changed little. In this study of credit and economic development, Maanik Nath shows that a tripartite set of risks restricted access to credit, affected the prices of credit and, in turn, perpetuated underdevelopment in the region. Bridging economic theory and historical evidence, Capital Shortage provides an authoritative account of the interactions between climate, law, policy design and economic development.