The survey report and article we publish below is significant in that it has been carried out, not by a Government agency, academic institution or private firm, but by an agricultural labourers’ organisation. Indeed, the surveyors were members of agricultural labour households of the very villages they surveyed.
(1) 84 per cent of the agricultural labour families surveyed were in debt, with an average debt of over Rs 91,000 per family.
(2) Interest rates on most of this debt ranged from 18 to 60 per cent per annum.
(3) The share of banks and cooperative societies in these households’ debt was only 16 per cent; indeed, the share of public sector banks was negligible.
(4) Nearly 30 per cent of the debt was extended by landowning farmers of different size categories (half of this amount came from those owning more than 10 acres).
(5) Private moneylenders accounted for almost one-fourth of the debt, charging usurious rates.
(5) A significant new finding is that microfinance agencies too accounted for almost one-fourth of the loans, charging interest rates as usurious as those of moneylenders. The authors of the article have commented on this new phenomenon in the latter half of the piece.
— RUPE
[Download tables and Hindi version of survey]
A Survey of the Indebtedness amongst Agricultural Workers in Punjab
Conducted by Punjab Khet Mazdoor Union
Causes and Condition of Indebtedness, Suggestions and Solution
The agriculture sector throughout the country is in the grip of a deep crisis. The suicides of peasants and agricultural workers reported every other day are the unfortunate but manifest proof of this crisis. The primary cause lying underneath it is the continuously increasing burden of debt upon the peasants and agricultural workers. At present, the issues of peasant indebtedness and the waiving of this debt have emerged with all the force at its command throughout the country. Many state governments including that of Punjab have made announcements for the waiving of the debt of the peasantry. (It is another matter that these announcements are not real but only exhibitive and paltry in nature).
But these governments have remained mum over the indebtedness of the agricultural workers who are the backbone of the agricultural sector. Punjab government has even declared that it does not have a solid data of the debt of the agricultural workers, and for this purpose, it has announced to constitute a legislative committee. This is only a pretention on its part. The constituting of this committee is a move to let this issue go down the drain. Firstly the argument that the government does not have the information about the condition of 30% of state’s population is improbable. Even if it is does not know it, then what is the problem in attempting to know it?
So Punjab KhetMazdoor Union conducted this survey with the immediate purpose of bringing to the fore the real picture of the indebtedness of the agricultural workers for the government and also for different sections of the society. This report of the survey is not its final version but only an interim one. Along with debt, other aspects of the living conditions of the agricultural workers such as employment and income, conditions of their houses, government schemes and concessions and essential household items are also included in this survey. The data concerning these aspects have also been collected but it is still being analyzed. Even then almost all the significant aspects of the conditions of indebtedness have been included in this report. No doubt our sample size is comparatively large, covering more than 1600 families, but still it remains only a sample survey.
AREAS COVERED BY THE SURVEY:
The data for this survey was collected from ten villages falling in five districts of Malwa region of Punjab, viz. Bathinda, Sri Muktsar Sahib, Faridkot, Moga and Sangrur, and two villages falling in Nakodar Tehsil of Doaba region’s district Jalandhar. In these villages, the survey was conducted not in a few chosen households but by going to every dalit household. While selecting the villages, besides taking into consideration our organizational base and influence, preference was given to at least one village situated near a city and the other far away from it in each district. The teams which conducted the survey comprised largely of agricultural workers inhabiting the same village. The thread of mutual confidence between the members of these teams and the families covered was, therefore, fairly strong. But in spite of it, re-survey was also done to clear the doubts, if any, arising out of the facts and data collected. Although this aspect of our teams was reassuring, yet their illiteracy or semi-literacy was problematic also. This problem was solved by the cooperation of activists from organizations of educated sections of the society. Many sincere teams which understood the significance of organizing agricultural workers joined in our efforts and remained involved till the end. We are thankful to these conscious and organized sections and it is with their extremely needful help that we could complete this task.
MAGNITUDE OF AGRICULTURAL WORKERS DEBT:
The total amount of debt of 1618 families covered under this survey is Rs. 12,47,20,979. Thus the debt per family comes to Rs. 77,083.
| No. of Families surveyed | Total amount of Debt | Average debt per family |
| 1618 | Rs. 12,47,20,979 | Rs. 77,083 |
Out of these 1,618 families, 254 families do not have any debt over their heads. Therefore total number of indebted families is 1364. As these families owe a debt of Rs. 12,47,20,979 (Rs 12.47 crore), therefore, average debt per family comes to Rs. 91,437. Out of 254 families found free from debt, some families informed that nobody is ready to give any loan to them. We still need to probe further into the condition of other families about their other supporting avenues of income. It has generally been seen that only those families of agricultural workers can remain free from debt, that have either its members in government service or have any other trade or work to do.
| No. of indebted families | Total amount of debt | Average debt per family |
| 1,364 | Rs. 12,47,20,979 | Rs. 91,437 |
DIFFERENT SOURCES OF LOANS:
There are varied sources from which these families got loans, such as landed farmers (who are further divided into three categories), moneylenders, shopkeepers, goldsmiths, banks, co-operative societies, microfinance companies and finance companies, friends and relatives etc. The biggest share (23.16 %) of the loans given is by microfinance companies, which comes to a total of Rs. 2,88,97,035, whereas the amount of loan given by the banks and the societies is Rs 2,02,19,969 which is 16.21% of the total debt. Even out of the loans given by the banks and the societies, a major share is by the private banks. The amount of loan given by the public sector banks is, therefore, small. The rate of interest charged by the private banks comes closer to that of the moneylenders. Similarly a new trend of microfinance companies giving loans to the agricultural workers has come to the fore. For these loans 26% is the standard rate of interest, but in the case of a defaulter not being able to pay the installments on time, the rate of interest touches even 50% to 60%.
The amount of loan given by the moneylenders to the agricultural workers is Rs 2,88,76,650 which is again 23.16% of the total debt. A large share of the loan given by the landed farmers is by those farmers, especially the landlords, who own more than 10 acres, and it is to the tune of Rs. 1,92,69,900, which is 15.46% of the total debt. Rs. 85,84,400/- have been given as loan to the agricultural workers by farmers owning 0-5 acres and it is 6.88% of the total debt. But the source of income of these lenders is not mainly agriculture, but from other occupations or these lenders being in service or retired employees.
A major portion of the loan taken from the relatives, a large part of which is without interest, comes from the families related from the side of the in-laws of a family’s son. This aspect is a sign of the girl’s parental family remaining under the social authority of a boy’s parental family in which the girl is given in marriage. The girl’s parental family many-a-times takes a loan on interest in order to fulfill the needs of the family in which the girl is married. The following table showing the different sources of the debt makes the picture crystal clear.
| Sr. No. | Source of the Debt | Amount | Rate of Interest lowest to highest |
| 1 | Landed farmers with >10 acres of land | 1,92,69,900 | 24% – 60% |
| 2 | Landed farmers with land 5 to 10 acres | 93,28,500 | 18% – 60% |
| 3 | landed farmers with land
0-5 acres |
85,84,400 | 18% – 60% |
| 4 | Moneylenders | 2,88,76,650 | 24% – 60% |
| 5 | Microfinance companies | 2,88,97,035 | 26% – 60% |
| 6 | Goldsmiths | 17,04,725 | 24% – 60% |
| 7 | Shopkeepers | 57,500 | 24% – 60% |
| 8 | Relatives/friends | 77,82,300 | 00% – 00% |
| 9 | Banks/cooperative societies | 2,02,19,969 | 7% – 24% |
The above table shows it very clearly that the rate of interest charged from the agricultural workers is pretty high, which ranges mainly from 18% to 60%
It was also noted during the survey that the landed farmers not only charge a high rate of interest while giving loans to the agricultural workers but also pay low daily wage to them. If the normal daily wage is Rs. 250 then the indebted workers are paid only Rs. 200. Besides it, nothing is paid for any work done for few hours at any time on numerous occasions. The women of these indebted families spend their lives scavenging the dung or rubbish in the homes of landed farmers and landlords in lieu of the interest on the loan taken. This aspect shows labor tied in the chains of feudal exploitation.
AMOUNT PAID AS INTEREST ON THE LOANS:
| Total amount of debt | Average Annual Rate of interest | Amount of Annual interest |
| 12,47,20,979 | 24% | 2,99,33,035 |
ITEMS ON WHICH LOAN AMOUNT IS BEING SPENT:
The survey makes it clear that the agricultural workers have to take loan to fulfill those needs which are unavoidable and arise out of dire necessity. These needs include treatment of illness, construction and repair of a house which is not more than having a roof over one’s head, domestic needs like the ability to have meals two times a day, unavoidable need and compulsion to pay for wedding expenses of a son or a daughter, to have alternative sources of work like farming by taking land on rent, to buy a used two-wheeler etc.
PURPOSES FOR WHICH LOANS ARE TAKEN:
| Purpose | Total Amount | % |
| Illness | 2,39,33,500 | 19.8 |
| Construction of House | 3,04,36,900 | 24.4 |
| Land on rent | 75,14,000 | 6.2 |
| Domestic needs | 1,76,96,110 | 14.18 |
| Machinery | 66,08,269 | 5.2 |
| Wedding | 1,79,16,475 | 14.3 |
| other needs | 2,06,15,725 | 16.5 |
| Total | 12,47,20,979 | 100 |
Out of the total amount of debt of the agricultural workers, the biggest amount of Rs. 3,04,36,900 was spent upon the construction of houses, which comes to 24.4% of the total debt. Rs. 2,39,33,500, the second big share of the debt, was spent upon the treatment of diseases and it is 19.18% of the total debt. The amount spent upon marriages comes to 14.3% of the total debt. The share of the total debt spent upon the fulfillment of every day domestic needs is Rs. 1,76,96,110 which amounts to 14.18% of the total debt. Loan amounting to Rs. 66,08,269, which is 5.2% of the total debt, was taken for the purchase of scooters, motorcycles and other such vehicles. Rs. 75,14,000 was taken as loan for doing farming by taking the land on rent and it amounted to 6.02% of the total debt. Rs. 2,06,15,725was borrowed for other needs. It is 16.5% of the total debt. These other needs include buying cattle, plot of land, digging of hand pump or electric pump for drinking water, buying a peter rehra, machine for grinding stone, old tractor trolley (all these three to be used as alternative source of employment), for performing the bhog ceremony of a near or dear one, or sending a son or daughter to a foreign country for earning livelihood there etc.
CAUSES OF BACK-BREAKING INDETEDNESS OF AGRICULTURAL WORKERS
- LANDLESSNESS: The basic reason behind the indebtedness of agricultural workers is the condition of their being landless. The thread of their living is tied to agriculture but they themselves are without any ownership of land. Only an insignificant section amongst them possesses small holdings. There exists a heavy deficiency of accumulated capital, agricultural implements and means of irrigation with them. Farming on the land taken on rent also proves to be a loss making deal. A fact has come to the fore in our survey that 36 families out of a total of 1618 families have come under the debt of Rs. 75,14,000 because of their venture to take land on rent. Although this amount seems to be a small amount in comparison to the total amount of debt, the amount per family comes to be Rs. 2,08,722. This amount is the highest amount of loan taken per family amongst the loans taken for other purposes. 12 families out of the total surveyed families possess merely 21 acres of land. According to the revenue record, 37,753 agricultural workers families (scheduled castes) in Punjab, own 64,513 hectares (1,61,282.5 acres) out of the total land holdings in Punjab. It comes out to be 4.27 acres per family. Out of these, 330 families have 4,754 hectares (11,885 acres) of land. They are, no doubt, counted as dalits but their class position has undergone a change. Amongst them are included dalit politicians and high bureaucrats.
34,306 families, having less than 10 acres own a total of 43074 hectare (1,07,685 acres) land. Out of these, 25,665 families, have 21,280 hectare (53,200 acres) land. In these 25,665 families, there are 16,167 families who have a total of 8,569 hectares (21,422 acres) land, which comes out to be about 1.32 acres per family. On account of small holdings and a deficiency of means of irrigation and agricultural implements, they cannot do farming in a profitable manner on their land. If they give it on rent they get much less than the prevalent rate. If ever they attempt to take land on rent, it turns out to be a loss making deal because of high costs of production and heavy rent. On account of anti-peasant and anti-agricultural workers policies of the government, while agri-labourers are in deep crisis, the process of dispossessing farmers of their lands has also intensified. According to another survey conducted by B.K.U. Ekta (Ugrahan) in three villages of Moga and Barnala districts, 17% of the landed peasantry has already become landless.
Viewing from this angle, it emerges out that besides the agri-labourers, there are large number of non-dalit farmers, who have become landless or have small landholdings, although remain involved with agriculture and land, but being landless or having small land holdings, the agriculture for them has become a cause for mounting debts and has ceased to be viable. Moreover, the government policies are accelerating this process.
- LACK OF EMPLOYMENT OPPORTUNITIES & LOW WAGES :
Employment in the agricultural sector has been hit hard by the mechanization, commercialization in this sector and the increased use of pesticides and weedicides under green revolution. As a result, remuneration for work has plummeted. On account of this situation, the gap between the income of agricultural workers and the expenditure incurred by them has increased. The increased use of weedicides has snatched away the work of rooting out the weeds or hoeing the fields from the agricultural workers. This has also harmed the practice of running the occupation of animal husbandry with the help of reaping the grass and using it as fodder. In this manner the use of weedicides has not only divested the agricultural workers of their employment but has also contracted the occupation of animal husbandry in their hands. Although animal husbandry has never remained an occupation earning enough money for the agricultural workers because of the lack of land in their hands, even then the rearing of cattle by the worker families by reaping and using the grass as fodder and sweeping the threshing ground for chaff, had always remained means for fulfilling one or the other of their big needs. But in the present times animal husbandry is going out of their hands.
There was a time when agricultural workers in the cotton belt used to get chhities (cotton plant residue, used as fuel) either free or at a negligible price. Many enterprising families were able to collect and store this kind of dry fuel for the whole of a year. But now even the collection of dry fuel has become a problem. The harvesting of wheat and paddy has now been taken over almost in its entirety by the harvesting combines. The making of chaff from the wheat stalks is also being done by the machines. In this way the season of the harvesting of the wheat, which earlier ran for more than one and a half months, has now been contracted to a few days only. The chaff-making machine has snatched the work of picking of the fallen ears of wheat from the fields by the women agricultural workers. Before the present times, the agricultural workers got employment for at least one and a half or even two months when the wheat was harvested manually or with harambha machines. Besides this, women agricultural workers were able to collect wheat grains and chaff in ample quantity by picking the fallen ears of wheat and sweeping the threshing ground. But because of the coming of harvesting combines and chaff-making machines, there has been not only an all round devastation of employment but buying of chaff for the cattle at a high rate has now become a compulsion. Similarly the employment of about two months at the time of paddy harvesting has also evaporated. Along with it the work of spreading manure in the fields and raising the level of a place with loose earth has also been sacrificed at the altar of mechanisation.
As a result of all this, men and women agricultural workers are hardly able to have employment in the agricultural sector for 4 or 5 months in a year. This condition has made the fulfillment of the basic needs of the agricultural workers impossible. Under these circumstances the agricultural workers have been left with no option but to raise loans at high rates of interest. In this way the policies underlying the green revolution became an important cause behind the increasing weight of debt over the heads of the agricultural workers. We are not against scientific progress in any manner. But every scientific development in the agricultural sector should be of such a nature that it should become a means to lighten the burden of labor from the people engaged in doing labor and not a means for devastating their employment opportunities. Or it must provide alternative employment to hands getting relieved from agriculture.
As a result of green revolution, there have been, no doubt, an increase in the agricultural produce, but the costly seeds, machinery, fertilizers, fuel, pesticides and weedicides has pushed the peasantry (not the landlords) under an intolerable weight of debt by first resulting in its impoverishment.
This survey about the indebtedness of agricultural workers have emphatically brought to the fore another reality and facts that a huge share of their debt i.e. Rs. 2,39,33,500 was spent for the treatment of illness. If we look a bit attentively then it becomes clear that the cause behind the now prevalent diseases like cancer, hepatitis B & C, failure of kidneys, weakening of the bones and heart attack etc. is the spreading of pollution on account of the new model of agriculture. It is the policies behind this model which are mainly responsible for it. These diseases not only drain the strength of bodies of the workers but also compel them to raise loan at exorbitant rates of interest in a situation of emergency. On the other hand the policies of the governments have not only denied employment opportunities to the workers but have also snatched from them proper opportunities for treatment. As various governments have left the welfare policies behind under the diktat of neo-liberal policies, the health systems and institutions have also been commercialized and privatized. In this situation the agricultural workers are left with no option but to get treatment from costly private hospitals by raising costly loans or they inexorably move towards their death inch by inch.
(3). EXTREMELY DISCRIMINATORY, BLAMEWORTHY & BLOOD SUCKING DEBT POLICY:
Another reason for the indebtedness of the agricultural workers is the extremely discriminative, blameworthy and blood sucking bank policy of the government for them. It can be clearly seen from this survey conducted by the Punjab Khet Mazdoor Union that in the amount of debt standing against the agricultural workers, the amount given by the public sector banks is highly paltry. The only reason lying behind it is that the public sector banks are evading to give loans to the agricultural workers. The meager loans advanced usually carry 12% rate of interest.
On the other hand these very banks are providing loans to big capitalists and corporate houses either without interest or at abysmally low rate of interest. They are also given special concessions at the time of advancing the loans and its recovery.
A policy by the Reserve Bank of India has now been framed and implemented to accord recognition to blood sucking microfinance companies and self help groups which give loans to agricultural workers, women and other weaker sections at exorbitantly high rates of interest. Besides being accorded legal sanction, these companies are also being provided huge amounts of capital by the banks. Their capital is being guaranteed and the recoveries of the loans is also being ensured.
There is a provision for cheap bank loans to the owners of the land. The rates of interest for these loans are 4%, 7% and 12%. No doubt, for the poor peasants the rate is not that high but the conditions of recovery are very hard. But in comparison with agricultural workers, this is a concessionary policy. The extremely surprising position lies in the fact that arrangements have been made for providing cheap loans to the tune of thousands of crores to the owners of agro-based industries in the name of increasing manifold the allocation for loans to the agricultural sector. And now a policy has been made to provide capital to the usurers from out of the amount reserved for the agricultural sector. Free reins have been given to the aggressive practice of these usurers to give loans to the agricultural workers at a rate of interest ranging from 24% to 60%. The avoidance on the part of the public sector banks to give loans to agricultural workers at cheap rates compels them to get loans from private moneylenders and landlords at high rates of interest. The governments are continuously in a denial mode to regulate the business of these moneylenders and to bring them within the legal framework.
SOME POLICY-ORIENTED SUGGESTIONS FOR SOLUTION OF DEBT PROBLEM
- There is a pressing need for radical land reforms to solve the problem of debt of the agricultural workers besides that of peasants also. The deficiency of land as it is there among the poor peasants and agricultural workers should be fulfilled by distributing among them the surplus land above the present land ceiling (17.5 acres) and the benami, barren and useless land by making it cultivable. Large budgetary provisions are required to be made for making the farming practised by these section a profitable occupation. Appropriate steps should be taken to turn the barren land and that irrigated by the tubewells into the land irrigated by canal water. There is also a need to supply the agricultural inputs like fertilizers, fuel, seeds, machinery etc. at cheap rates by applying a cut on the super profits of their manufacturers and traders. Such seeds should be developed which are high yielding, compatible with the local weather conditions and should either be free from the use of fertilizers and pesticides or else require them as minimum as possible. A policy for government purchase needs to be made in order to ensure profitable prices for the crops.
- Appropriate steps should be taken to establish agro based and employment generating industries so that work can be provided to the labour power rendered surplus from the agrarian sector and thus a solution can be found for the agricultural workers and peasants being thrown into the trap of indebtedness because of unemployment. At present there are about 15 lakh agricultural workers in Punjab. These workers do not get employment for even six months in a year. If we consider only Rs. 200 wage per day for these workers passing through the agony of unemployment for six months, then a labour power of the value of Rs. 52 billion goes waste every year. Therefore the urgent need is to provide full employment to these workers.
- There is a need to reject the policies of privatization, commercialization and liberalization in order to put a brake to unemployment. A policy to provide free education upto the university level to children of all the working people especially agricultural workers should be implemented. Similarly there is a need to implement policy for providing free & affordable health services. Besides filling lakhs of positions lying vacant in different government departments, there is a need to implement a policy of permanent employment by scrapping the policy of contractual recruitment. It implies that new positions should create with more necessities for services coming into being.
- Another cause behind the debt of agricultural workers going up is the rising prices. This rise should be controlled forthwith. For this purpose there is a need to strengthen and widen the reach of public distribution system by leaving the policy of winding it up behind. Budgetary provisions should be made for allotment of plots and construction of houses for the agricultural workers in order to fulfill their needs of lives. A policy must be made to implement and release the finances for these provisions.
- The entire debt of the agricultural workers, landless peasants and those who are unable to pay their debt be waived immediately as these debts have increased due to the discriminatory, blameworthy and blood sucking debt policy. There is also a need to advance public loans to agricultural workers and poor peasants either free of interest or at cheap rates of interest. The need is to frame and implement a pro-people debt law to end the cruel exploitation by the usurers. There is also a need to bring the total income of the landlords within the ambit of income tax and scrap the provision of giving cheap loans and other concessions to landlords, owners of agro based industries and usurers in the name of peasants.
But the above mentioned policy-oriented suggestions to make the agricultural workers and peasants free of all their debts and to bring happiness in their lives cannot be expected to be fulfilled by the governments which are the representatives of the landlords, moneylenders and big industrialists, and lackeys of imperialism and anti-people political parties. For this the need is to march forward on this path by organizing a broad and united movement of agricultural workers and peasants and also taking along with it other working people tormented by the present governmental policies. To state this formulation more clearly, it is not possible to remove the causes behind the indebtedness of agricultural workers and peasants without getting liberated from the yoke of feudal and imperialist loot. Therefore liberation from this debt and causes engendering it like inflation, unemployment, diseases, dearth of land, discriminatory and blood-sucking debt policy can be achieved only by building a society where the writ of peasants, agricultural workers and other working people runs as was conceived by Shaheed Bhagat Singh.
Part-II
MICROFINANCE INSTITUTIONS: ANOTHER METHOD OF USURIOUS EXPLOITATION (A discussion on some aspects)
The working people of our country and our state also have seen falling prey to a severe feudal exploitation in the form of usury since long. The new economic policies implemented in the name of globalization has played a significant role in further sharpening this exploitation. This attack has further strengthened the traditional usurious exploitation directly, and has accelerated the practice of sucking the labour power of the people by keeping its content intact through other means. Whereas the reach of rural working people, especially the agricultural workers, to the banking system has already been negligible, the onslaught of globalization has made the agricultural working people devoid of the trifling sums they were getting in the name of bank loans. It has diverted the banking capital completely towards big businessmen and corporate world. Thus it has sharpened the exploitation of the agricultural workers through loans taken from traditional sources. The sources of loans for agricultural workers have further contracted because they are landless and unable to return their loans on account of their continuously deteriorating condition. Under these circumstances the native and foreign big capital has started spreading its tentacles for giving loans to agricultural workers on the usurious pattern. And the big capital has formally entered the usury business under the name of microfinance. The most serious aspect of this situation is that the banking capital, which has earlier withdrawn itself from giving direct loans to the agricultural workers, has become a partner in this business. Now big companies have begun to exploit the agricultural workers cruelly by first acquiring the banking capital. It would take the exploitation of these workers to a new height. Agricultural workers are now falling prey to the usurious loot by this new method which has appeared as a new trend in the recent past. On the basis of our investigation we have taken note of some aspects of this new trend which needs to be understood more comprehensibly with further study.
The usurious debt has spread its sharp nails in a new form in the Indian economy. This new form is that of microfinance establishments. These microfinance establishments, which work under different titles like encouraging the small entrepreneurs, creating new means for income, giving loans without any surety, self-help groups etc., are instruments for bringing those parts of society under usurious loot which do not get loans from the ordinarily operative establishments because of their economic position. The survey conducted by the Punjab KhetMazdoor Union has emphatically shown that these establishments have spread its sharp nails in the dalit quarters of our villages.
Hundreds of establishments like Janlakshmi, E-Kates, S. K. S. have come up like mushrooms since the past 15 years. These establishments take loans from the bank on cheaper rate of interest and give loans from the same amount on higher rates of interest. This difference between the rates of interest becomes 87% of its income. Besides interest, other sources of their income include file charges, expenditure on insurance etc. Above all this, these establishments recover 13 installments in a year by counting 28 days as a month. If any debtor is not in a position to pay the installments, he is made to pay the entire debt in a single installment by deducting this amount from a new loan approved and advanced to him. Thus the debtor gets only the remaining part of the new amount of the loan. It implies that all the installments of the old debt along with the interest are recovered before the stipulated time. According to one estimate these establishments in reality charge 40% rate of interest per annum from the debtors.
The first avatar of these groups in the form of Self Help groups has been active since 1997. The banks advance loans to groups of entrepreneurs (primarily women) from these groups without any surety. The responsibility for the repayment of these loans is collective. It means that a social pressure along with legal action is put on an individual in that group who defaults on the payment of an installment. The authority to prepare and process papers, to get and repay the loans is vested in the NGO’s. Leaving aside solitary cases, the NGO’s earn money like usurers. They advance loans to the rightful individuals at higher rates of interest after getting the loan money from the banks. In many instances these rates of interest are found to be Rs. 10 per hundred. In this way the usurious income has been allowed to be expanded legally through this new form of microfinance establishments.
In India these establishments are the means by which attempts are made to mould the economy under and in accordance with imperialist guidelines. The imperialists characterize this exploitative policy as a policy meant for taking financial services at the doors of those who are without any facilities or privileges. It is meant to expand and take the imperialist loot to those people who are yet not affected directly by it. It is, thus, meant to bleed the poorest of the poor. In 2010 the meeting of G-20 countries took it in its hands as its main agenda. The imperialist companies see a market of four hundred thousand million dollar per annum among the poor working people of the third world. This market would come alive only after bleeding the people of countries like India in the financial sector. In this way the imperialist capital is following the mode of direct traditional feudal exploitation. The roots of this exploitation are being spread by deepening them through the microfinance establishments. The net of the financial loot would entangle and strangulate every individual, every household and every group. It would do so in order to come out of its own crisis. Any kind of real development and production is not possible because of the financial policy of money earning more money without caring for any real productive activity. In fact the capital meant to be invested for real production would also be drawn into this blind well of financial business.
These micro financial establishments have played havoc in many countries. They have earned extreme forms of disrespect by resorting to oppressive methods to recover rates of interest as high as 75% to 100%. Bangladesh’s biggest microfinance establishment Gramin Bank, whose founder was awarded Nobel prize in 2006 for starting microfinance services, has been accused of cheating the people to the tune of crores of rupees and bleeding the people in the name of eradicating poverty. In India also microfinance establishments like S. K. S. have developed and expanded within no time. S. K. S.’s own reports tell us that it earned a profit of 281 lakh dollars in 2015. On the other hand, newspaper reports in 2010 confirmed that 200 peasants in Andhra Pradesh committed suicide who were indebted to microfinance companies. There are innumerable stories of the use of foul language against and public insults and thrashing of the poor people at the hands of these microfinance establishments.
Only such poor people are customers of these microfinance establishments to whom neither the arhatiyas give loans because they do not have any property, nor do they have anything to show as security for getting loans from the banks. Although these loans are advanced for the purpose of creating or increasing the means of a household but, in reality, these are spent on immediate domestic needs like bhog ceremony of a dear and near one, marriage, illness or construction of a house. The recovery of these loans given without any surety is naturally done by using agressive methods. As the poor people have the ‘choice’ to beg for loans from these establishments only, the installments of these loans are paid by selling cattle, domestic goods like utensils and even beds etc. In many instances as the responsibility to repay the loans is collective, the social pressure becomes the surety behind the repayment of a loan when an individual defaults on an installment. These establishments give the private and financial information of these loans to the Credit Information Bureau so that they are not able to get any governmental or other help in the case of not being able to pay the installments on time. Connecting of all the loans with the Aadhar card is a part of this scheme.
These establishments do not earn the money for giving loans from any developmental or productive activity. For this purpose they get loans from banks at cheaper rates of interest. These establishments were indebted to banks to the tune of Rs 44,822 crores on 31st March, 2016. A major share of this loan was given by the public sector banks. Further, 97% of this loan was taken by the establishments having a business of more than 500 crores. It means that more opportunities were created for the big exploiters to exploit the others.
These establishments often sell the loan accounts to the banks after opening them. It is another matter they continue to operate them even after selling them. These accounts are called Managed Loan Portfolios. By doing this they become free from the responsibility of creating financial sources for advancing loans. It means that finance comes from the banks, but income is of these establishments. They earn profit first by getting loans at cheaper rates, then by selling the loan accounts and lastly by recovering the loans at higher rates of interest.
The Banks also give loans through the microfinance establishments instead of giving them on cheaper rates of interest directly. During 2015-16, more than 1/4th of the total loans were given in this way. Here also the big fish devoured 97% of the total loans.
In fact this game of providing financial means to the people without means is being played to fill the stomach of big compradors.
In 2016, the total debt advanced by these establishments to all the debtors stood at Rs. 81,000 crores. This debt has increased from Rs. 15,000 crores to Rs. 81,000 crore in a period of only 5 years. The debt standing in the name of Self Help groups is separate from it. It was Rs. 87,119 crores for one year (2016) only.
There was a debt of Rs. 1,116 crore in 2016 over the heads of the people of Punjab. This was an increase of 37% over the previous year. From this it becomes amply clear that these new kind of usurers are spreading their sharpened nails in northern India also after bleeding the people of southern India. The statistical data pertaining to 2015-16 show that average debt per person given by these establishments at all India level was Rs 11,425 whereas for northern India it was Rs 15,717.
It is to be seen as what kind of influences these establishments would have on the workers and peasants, and small businessmen in the midst of present agricultural crisis. This needs a serious attention on the part of the conscious sections of the people and peasants’ and workers’ unions. The present day conditions demand a deeper probe of this trend, a comprehension of its implications and giving it a place amongst the problems of agricultural workers that it deserves.
ISSUED ON SEPTEMBER 17, 2017 AT TEACHER’S HOME, BATHINDA BY:
PUNJAB KHET MAZDOOR UNION
Jora Singh Nasrali (President) 98763-94024
Lachhman Singh Sewewala (General Secretary) 94170-79170
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