My Article in The Tribune dated 15th September,2014 on Farmer Suicides. Misusing Loans and Farmer Suicides S. S. Johl There is multiple numbers of causes that lead the farmers to commit suicides as the last resort when the life becomes unbearable. Debt is only one cause, though a very important one. There are factors like genetic built up for suicidal tendencies, family disputes, personal incompatibilities and sometimes even self inflicted irrationalities. Debt as an important cause has its peculiar nuances. Majority of farmers who are driven to take such a horrible step borrow from private money lenders, including commission agents and big farmers, mostly under emergency situations at exorbitant rates of interest. They are not able to repay these loans because these are invariably used for nonproductive purposes that do not generate any additional repaying capacity. When these borrowers are pressed for repayments they are often compelled to resort to bank loans. They take crop loan or many often borrow for buying tractors, which they immediately sell in the market at lower price and retire the loan obtained from private moneylenders. In some cases the cheap rate credit facility is misused also. Some bigger landholders have been observed borrowing from the banks to the limit of their entitlements even though they do not need that money. This low cost money they lend to the poor farmers at higher rates like other money lenders. As to the self-inflicted irrationalities some examples are provided in a report submitted by a committee on farmers’ distress set up by the Reserve Bank of India under my chairmanship, where the suicides/deaths were not even remotely related to the farmers’ indebtedness but treated as farmers’ suicides. To quote an example a farmer bragged of taking 16 pegs of country made liquor in continuity, but died after he gulped 12 pegs. This was treated as farmer suicide and compensation of Rs. one lakh was paid to the family. Another notable point is that due to the extensive media reporting, more cases are being highlighted now. In one of the expert discussions on farmers’ suicides about a decade ago, the then union secretary, Mrs. Radha Singh, quoted a government survey that brought out that there was no difference in percent of persons committing suicides to the total population and no difference in ratios of male and female suicides or any change in the ratio of suicides between urban and rural populations over a period of past one decade. Still, whatever the other causes and ratios may be, the fact remains that debt is one of the major causes of farmers’ suicides and deserves serious handling by the policy makers of the country. Surveys and resurveys repeated many times are not the solution. Even a single suicide by a farmer due to indebtedness should be a matter of serious concern. Also paying the compensation to the affected families after the suicides is only a palliative that does not eliminate the scourge of suicides. It is the preventive measures that are the need of the hour. Farmers’ indebtedness is not a new phenomenon, yet the intensity of it is believed to have increased. Also, it is not that no effort had earlier been made by governments of the time to stem the distress. For remedies, one needs to look back not very far. Just a decade before the country attained independence in the times of Unionist Ministries of Fasali Hussain, Sir Sikandar Heyat Khan, when just in six years from 1937 to 1943, at the behest of Sir Chhotu Ram, the government got legislated more than one dozen Acts and Amendments to protect the farmers from exploitation by moneylenders as well as market functionaries and traders. Some of the important Acts and Amendments were (i) Punjab Land Alienation (Amendment) Acts of 1938 and 1939 (four amendments) that insulated the peasants’ lands from attachments in lieu of debt incurred by them and debarred the non-farming classes from appropriating agricultural lands, (ii) Punjab Debtors Protection (Amendment) Acts of 1938 and 1939 that introduced the system of daam dupat laying down the provision that if the debtor had repaid double the amount borrowed, the debt would be considered as fully paid up. Taking a cue from this, the Reserve Bank of India committee on farmers’ distress under my chairmanship recommended the provisions that farmer’s house and upto five acres of land should not be taken as collateral for advancing the loans and these should not be attached to recover the loans due. If these provisions are made in the law, it can go a long way in remedying the situation that drives the farmers to commit suicides. One the measures that ameliorated the indebtedness of the farmers was the setting up of special District Level Boards that helped reasonable settlements between the farmer- borrowers and the money lenders and as a result the farmers were not pushed to take the extreme steps like suicides. Taking a cue from the past experience, it would be advisable to legislate an umbrella type ‘Farmers Debt Relief and Settlements Act’ that would, inter alia, provide for (i) insulating one house and five acres of land from attachment for recovery of loans and (ii) District level Debt Counseling and Settlement Board. The first provision will lead to compulsive evaluation by the lending banks of the genuine needs of the borrowing farmers and the repaying capacity that the loans would generate. This will further prompt the banks to monitor the utilization of the advances made to the farmers. This will, if not totally eliminate, put an effective check on diversion of the loans obtained for productive purpose to the unproductive purposes and borrowers will not be pushed to the level of unbearable distress. The second provision will provide the borrowers with an ultimate avenue that will settle the amounts to be paid and counciling for rescheduling the loans and planning the repayments within their paying capacity. These boards should have representatives of banks, farmers, financial experts and should be chaired by the retired judges. These provisions will go a long way in minimizing the incidents of farmers’ suicides.
Posted on: Wed, 17 Sep 2014 14:00:55 +0000
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