Debt relief in name only

A draft law on relief gathering dust for eight years testifies the ruling party's concern for the heavily indebted farmers of Punjab.

With chief minister Parkash Singh Badal keen to have a law for regulating the private money-lending system, it's now to be seen whether the Punjab Mandi Board chairman (Ajmer Singh Lakhowal) nominated by his party, the Shiromani Akali Dal (SAD), would take up the matter with him during the meeting scheduled this week.

Lakhowal is vociferous in his appeal for a law to regulate the money-lending system in the state. The Punjab relief of agricultural indebtedness bill, 2006, is the only draft with the state government to enforce regulation in the private money-lending system, where the rate of interest has crossed 30%. A study by Punjab Agricultural University suggests that of the total agricultural debt of Rs 35,000 crore, farmers owe Rs 13,300 crore to commission agents alone.

The draft legislation prepared during the fag end of the last Congress regime in 2006 was tabled in the Vidhan Sabha in 2007. The ruling legislators then curtailed the proposal, with only Surinder Singla and Rajinder Kaur Bhattal, erstwhile ministers in the Amarinder Singh regime, seeking "a review". Since then, the bill has been shelved in the office of the financial commissioner for development (FCD) and never once taken up for discussion at any level amid political sloganeering about bailing farmers out of the debt trap and exploitation at the hands of moneylenders.

The CM had stated last month during his talks with one of the Bharti Kisan Union (BKU) factions representing farmers that he had asked the senior officials concerned to frame this law. Senior officials here confirmed that there had been no official order from his office to review the draft legislation.

Assurance in high court

In its previous five-year term from 2007 to 2012, the Akali-BJP government had even submitted in the Punjab and Haryana high court that it would enact the draft legislation to regulate the rural credit system.

The state had also assured the court that the bill would empower it to establish "debt determination and settlement boards" for loans up to Rs 30 lakh at the subdivisional level, and have mandatory registration of all moneylenders for the recovery of their loan money.

The matter had come up in the high court during the hearing of a public-interest petition filed by non-government organisation (NGO) Movement Against State Repression on the issue of the farmers' suicide in 2008.

What the bill provides

The passing of the Punjab relief of agricultural indebtedness bill, 2006, will pave way for the constitution of "debt determination boards" at the sub-division levels, to be led by the subdivisional magistrates (SDMs), cap the interest chargeable by private moneylenders at 10% simple interest, and relieve the farmers of the mounting debt that has accumulated mainly because of the compound interest ranging from 18 to 30%.