Follow Us:
Sunday, August 14, 2022

Explained: The role of Arhatiyas in rural Punjab; row over linking farmers’ details to central database

This has angered the arhatiyas (commission agents), a large number of whom want the government to roll back its decision.

Written by Anju Agnihotri Chaba | Jalandhar |
October 6, 2019 4:12:13 pm
A hundred small steps A study by researchers at the Indian School of Business (ISB) found that over 25 per cent of Public Distribution System (PDS) beneficiaries in the state now use portability. (Representational)

Under pressure from the Centre, the Punjab Food and Civil Supplies Department has directed all government procurement agencies to link the bank accounts of farmers with the Public Finance Management System (PFMS) portal before the procurement of paddy begins. This has angered the arhatiyas (commission agents), a large number of whom want the government to roll back its decision.

How does the arhatiya system in Punjab work, and what is the background of the current controversy?

What is the PFMS portal?

It is an online platform developed and implemented by the office of the Controller General of Accounts (CGA) under the Union Ministry of Finance. The PFMS portal is used to make direct payments to beneficiaries of government schemes. In the present case, the idea is to monitor the accounts of farmers to ensure they get the payment for their crops from the arhatiyas, who pay farmers only after selling their produce and receiving the money from the buyers.

Why are arhatiyas against it?

The Food and Civil Supplies Department has announced that if accounts are not linked with the PFMS portal, the arhatiyas’ commission, which is 2.5%, and the administrative charges, would not be released. While government agencies have asked the arhatiyas to provide the account details of farmers, the arhatiyas have claimed that the farmers are not willing to share the details. Some farmers with longstanding relationships with the arhatiyas have, meanwhile, approached the Punjab and Haryana High Court against the government.

Subscriber Only Stories
Explained: Why South Korea is phasing out ‘Parasite’-style semi-basement ...Premium
As US weighs Guantánamo options, Saudi center may offer solutionPremium
Their own worst enemy; how Britain’s education policy cost it the Empire’...Premium
UPSC Essentials: Weekly news express with MCQs— RBI’s surveys to fo...Premium

While the government has been underlining the need to bring transparency into the system, the arhatiyas are wary of monitoring. They also fear that the linking of farmers’ accounts to the PFMS database is only one step short of the government deciding to make payments directly to farmers, cutting the agents out all together.

Is this effort an entirely new initiative?

Punjab’s earlier SAD-BJP government had launched a ‘direct payment’ scheme under The Punjab Agriculture Market Act, under which farmers were asked to fill in a form to receive payments directly for their crop sold to government agencies.

And in April this year, ahead of the wheat procurement season, Union Minister for Consumer Affairs, Food and Public Distribution Ram Vilas Paswan had asked Punjab to take the procurement system online, especially for wheat and paddy. The arhatiyas’ commission and mandi labour costs in Punjab were higher than in other states, and there was no reason to not pay the MSP directly into the bank accounts of farmers, the Centre had argued.


Neither of these efforts were, however, successful. The procurement system in Punjab remains largely in the hands of arhatiyas, who receive payments in their accounts and then pay farmers by cheques or cash, with no records. State agencies have no record of payments made to individual farmers; only the so-called ‘J’ form, which does not have this information.

What do the farmers themselves want?

A majority of farmers now want to link their accounts with the PFMS portal and prefer direct payments in their accounts. Most of the members of the eight main farmers’ organisations, with memberships running into lakhs, are against the arhatiya system in Punjab. However, the arhatiya system continues to flourish. This, experts say, is due to the strength of the arhatiya lobby, which allows a section of the 48,000 registered arhatiyas to control some 18.50 lakh farmers.

There are also allegations of massive corruption and vested interests. “The government is hand in glove with the arhatiyas,” said Jagmohan Singh, general secretary of the BKU EKTA (Dakaunda). It is alleged that many influential officials and politicians use arhatiyas to employ their ill-gotten wealth in high-interest loans to distressed farmers.


Arhatiyas remain powerful figures in the rural landscape. Each agent has between 20 and 200 farmers, whose crops he sells. Together, arhatiyas manage around 160 lakh tonnes of paddy and 180 lakh tonnes of wheat that is procured every year over a period of 3-4 weeks in October and April respectively. Even the government is dependent on the arhatiyas, who provide fans, weighing machines, and labour to shortstaffed government agencies.

Arhatiyas are also moneylenders who fund farmers’ requirements of cash for both cropping operations and personal and social requirements. For many farmers, borrowing from the arhatiya, whom they know personally, is easier and more convenient than approaching a bank with its unfamiliar procedures, impersonal service, and unfamiliar officials.

“If the arhatiya system is finished, private financiers will step in, and take away our land entirely,” said a farmer, articulating a common apprehension.

📣 Join our Telegram channel (The Indian Express) for the latest news and updates

For all the latest Explained News, download Indian Express App.

  • Newsguard
  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
  • Newsguard
First published on: 06-10-2019 at 04:12:13 pm
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by

Featured Stories