Ruchika M Khanna
Tribune press service
Chandigarh, July 12
The debt of a household of agricultural workers in Punjab has increased by 61.36 percent over the past 30 years.
Most of the debt incurred by agricultural workers comes from non-institutional sources, mainly because they do not have access to institutional sources of finance. These workers pay 20.6 percent interest on these loans, taken from their respective owners or employers. This interest rate is double the rate charged by institutional sources of financing, such as banks (10.2%).
“Money lenders charge double interest”
The interest rate charged by institutional sources of finance increased from 13.75 percent to 10.2 percent during the period under review. Interest charged by lenders and private landlords is 20.6 percent. – Sukhpal Singh, agro-economist of PAU, Ludhiana
This vulnerability of agricultural workers to financial exploitation and poverty is underlined in a study “Punjab’s Agricultural Laborers in Transition”, conducted by agro-economist Sukhpal Singh, of the Agricultural University of Punjab, Ludhiana, and Shruti Bhogal , from the Centers for International Projects Trust. , New Delhi. The study, which spans three decades (1987-88 to 2018-19), is significant, given the high suicide rate among farm workers.
Sukhpal was among the handful of economists who had previously recorded the suicides of farmers and farm workers in the Punjab due to high debt. During the period 2000-18, of the 7,300 suicides of agricultural workers recorded in Punjab, 5,765 suicides (78.97%) were due to high debt. Of these, 14 percent of the workers were women, compared to 8 percent of the female victims among the farmers.
The study shows how, despite the decline in the proportion of indebted households from 89% (1986-87) to 81% (2018-19), due to the shift from agricultural labor to non-agricultural labor, the amount of debt increased from Rs 5,769 to Rs 10,096 per farm worker household. He also points out that debt from non-institutional sources (mainly owners or employers) increased from 72.4% in 1987-88 to 89.89% in 2018-19.
Sukhpal said, “Over time, government intervention in providing financial and physical assistance through programs such as the marginal farmers and farm laborers program and the training of rural youth for the self-employment, has declined, resulting in their dependence on non-institutional sources of credit. The interest rate charged by institutional sources of finance increased from 13.75 percent to 10.2 percent over the 30-year study period, and that charged by lenders and private landlords increased. from 24.9 to 20.6 percent. But it is still double what is charged by the banks.
Interestingly, the government has doubled credit to the agricultural sector since 2005, but workers are still denied loans from institutional sources. “It shows vulnerability to financial exploitation and misery, which is vicious in nature. The loans taken out by the workers are mainly intended for consumption purposes (food, daily expenses, health care and socio-religious celebrations). Although there has been a transition in the work of workers – from agricultural activities to non-agricultural activities – these families have not been able to get out of the debt trap, ”the study said.
The study also highlights how a significant portion of agricultural workers shifted to non-farm activities between 1987-88 and 2018-19 (14.92 percent to industrial work, 9.39 percent to construction and 9 , 94 percent to stores).