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Posted at: Jul 6, 2017, 1:07 AM; last updated: Jul 6, 2017, 1:07 AM (IST)

Waiver may not help farmers in debt trap

Study paints grim picture

  • Rs 69,355 crore rural indebtedness
  • Rs 4.74 lakh average debt per rural household
  • Rs 17,000 crore farmers owe to arhtiyas
  • Rs 1.16 lakh debt per acre of land owned by farmers
Waiver may not help farmers in debt trap

Vishav Bharti

Tribune News Service

Chandigarh, July 5

Chief Minister Capt Amarinder Singh’s announcement of debt waiver, which excludes loans extended by arhtiyas, is unlikely to benefit the marginal and small farmers. Sources say farmers and agricultural labourers owe more than Rs 17,000 crore to the arhtiyas and other private money lenders.

Three studies conducted over the past two decades on rural indebtedness have found that farmers and farm labourers owe around one-fourth of debt to non-institutional sources such as arhtiyas, moneylenders, traders etc.

A study, “Indebtedness among Farmers and Agricultural Labourers”, published last month, states that in Punjab, 86 per cent of farmers are under debt. As a whole, the rural Punjab is under debt of Rs 69,355 crore, of which around 75 per cent comes from institutional sources like co-operative societies, banks etc.

It is found that farmers and agricultural labourers owe more than Rs 17,000 crores (25 per cent of the total debt) to non-institutional sources.

The average amount of debt per rural household is Rs 4.74 lakh. For an average farm household, the amount of debt per owned acre is Rs 1.16 lakh.

The largest share in non-institutional credit is of commission agents. It is found that farmers owe more than Rs 10,600 crore to arhtiyas, which makes 15.23 per cent of the total rural debt. Besides, they owe more than Rs 4,000 crore to moneylenders (5.86 per cent). And to other sources like relatives and friends, large farmers and traders and shopkeepers, they owe around Rs 2,500 crore (3.64 per cent).

It is revealed that small, marginal and semi-medium farmers don’t have easy access to banks, so they borrow money from arhtiyas and moneylenders at a high rate of interest. It was found that around 33 per cent marginal farmers and 28 per cent of small farmers took loan on an annual interest rate of 15 per cent to 28 per cent.

Experts feel that until the government doesn’t introduce regulatory mechanism for arhtiyas, the Punjab’s farmers can never come out of the vicious cycle of debt. “It is a question of ‘karza mukti’ not of ‘karza maafi’. So to ensure that the farmer remains debt-free, the government must ensure that loan should be 100 per cent institutional because the terms and conditions laid down by arhtiyas lead to ruthless exploitation of the farmers,” said Prof Gian Singh, Economics Department, Punjabi University, who is also the main of author of the study.

The CM has already said he could not waive loans given by arhtiyas as there was no account of such credit.


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