The flip side of Punjab’s debt waiver scheme is that most farmers, expecting their loans to be paid off, have defaulted on their payments. (Source: AFP/File)
KHARAK SINGH (75), a farmer and member panchayat of Jhotiwala village in Faridkot owes Rs 25,000 to Punjab National Bank (PNB) and Rs 10,000 to the village Cooperative Society. The loans date back to March 2017. He did not pay the money back after selling paddy produce thinking the Punjab government would waive off his debt as was promised by Punjab Chief Minister Amarinder Singh.
Consequently, he could not borrow from the bank or the cooperative society when the time came for him to sow his wheat crop and he needed more money. He turned to a private money lender for Rs 10,000.
“Hor ki karda. Paet ta bharna hi hai kisse tarah (What else could I do. I need to make a living somehow),” said Kharak Singh, who takes six acres on contract for farming.
Kharak Singh is one among 600 members of Jhotiwala Cooperative Society. The society, catering to three neighboruing villages of Burj Masta, Middhu Maan and Jhotiwala, has 600 farmers on its members list. The Punjab government’s farm debt waiver is for sums upto Rs 2 lakh for small and marginal farmers (who have upto 2.5 acres of land. The scheme covers only those with loans from co-operative societies. Only 45 farmers, 23 from Jhotiwala and 11 each from the other two villages, qualify for the waiver. Barring those, most others in the village said they had had turned to commission agents or private money lenders.
The loan waiver scheme was rolled out on January 7 from Mansa district where around 47,000 marginal farmers from five districts in Malwa region were given cheques towards loans taken from cooperative lenders only. The total amount waived was Rs 167 crore. Earlier this week, as Chief Minister Amarinder completed on year in office, he waived off loans of another 29,192 farmers totalling 162.16 cr.
The flip side of Punjab’s debt waiver scheme is that most farmers, expecting their loans to be paid off, have defaulted on their payments, co-operative societies and banks in the state have cut back on agri loans in 2017-2018, and moneylenders are on top.
Surjit Kumar Gogna, a money lender based in Mandi Ahmedgarh, told The Indian Express that the farmers were turning to him in numbers.
“This year, the number of farmers coming to me for loans was really high. They have been turned back by not only the cooperative societies but commercial banks also. It came to such a pass that I had to disappear for a few days as I could not say no to them and I did not have that kind of money to lend,” he said.
He added while it was easier for commission agents to lend money as they had the next crop as guarantee, the money lenders had to ensure a mortgage as guarantee. “Otherwise, the unfortunate incidents of farmer suicides scare us.
Once a farmer kills himself, our money cannot be recovered.”
“We all filled Captain’s debt waiver forms. We were hopeful he would waive off all loans. If you do not return the loan in six months you are turned into a defaulter. Now, we have no option but to go to private moneylenders,” said Surjan Singh (85), showing his cooperative society passbook with an outstanding of Rs 25,000. He said he had borrowed money from private moneylenders at 5 per cent interest.
Paramjit Singh, a former sarpanch of the village and an Akali leader, said the situation was turning grave. “Out of 600, 555 have not got the waiver. Only a few did not default on their loans. I hear from most of them that they are in the trap of commission agents,” he said
Basant Singh, another farmer, having a debt of Rs 10,000 from cooperative society, could not pay it back. “I have been summoned by the cooperative society 50 times. I am a defaulter now and I can’t go to a bank any more,” he said.
Even those who got the waiver have had to knock at money lenders doors. Baldev Singh, a beneficiary of the scheme, had his Rs 30,000 loan from co-operative society waived. But he defaulted on the interest payment of Allahabad Bank.
“I had to pay an interest of Rs 36,000. I did not as the government had made a promise. So now I am a defaulter. I have to go to private lenders.” he said.
Another beneficiary, Balwinder Singh, whose Rs 25,000 has been waived off said he has an outstanding of Rs 10 lakh from State Bank. “We thought we would get a waiver. So I did not pay the bank installment. The loan waiver too came in January. Before that I had a requirement of Rs 25,000. I borrowed at two per cent from a private lender.”
Their stories are corroborated by the report of Punjab State Level Bankers Committee (SLBC). The credit to farmers, by commercial, regional rural and cooperative banks, has fallen short of the target.
This indicates the shift of source of agriculture credit to non-institutional sources of finance, says an SLBC office bearer.
P S Chauhan, convener of SLBC had made a request to the state government a few months ago to roll out the debt waiver scheme to save the banks as well as the farmers from falling into money lenders trap.
As per the latest report by SLBC of December 31, 2017, in terms of crop loan – given to farmers in each crop cycle — lending is short by Rs 17,555 crore against a target of Rs 70,235 crore.
Commercial banks have lent Rs 8,005 crore less than the target of Rs 46,938 crore; cooperative banks, Rs 9783 crore less than a target of Rs 19005 crore; and Punjab Agriculture Development Bank, Rs 129 crore less than its target of Rs 278 crore.
Similarly in terms of term loan for agriculture, lending is short by Rs 27,718 crore than a target of Rs 92719 crore; commercial banks have lent Rs 6981 crore less than a target of Rs 17,152 crore, cooperative banks, Rs 1126 crore less against a target of Rs 3617 crore; and PADB, Rs 697 crore less than a target of Rs 798 crore .
In 2016-2017, banks had a higher credit target than the current fiscal. Against a total target credit of Rs 69,013 crore last year (Rs 64090 crore this year) , the commercial banks were able to lend Rs 61.805 crore compared to Rs 49,104 crore this year.
Similarly, the cooperative banks last had a higher target of Rs 25,449 crore (compared to Rs 22,642 crore last year) out of which Rs 15,991 crore was lent to the farmers compared to Rs 10,813 lent to the farmers this year.
The PADBs had a target of Rs 1,284 crore last year (compared to Rs 1,076 crore this year) and were able to lend Rs 663 crore (compared to Rs 250 crore this fiscal).