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Punjab wheat procurement crisis: Caught in the crossfire

As banks freeze lending to Punjab government, payments of over Rs 8,000 crore to farmers held up.

Written by Anju Agnihotri Chaba , Raakhi Jagga | Jalandhar | Khanna (ludhiana) |
Updated: April 21, 2016 8:59:29 am
Punjab farmers, Punjab wheat procurement crisis, cash credit limit (ccl), wheat procurement crisis,sad-bjp government, punjab assembly elections 2017, nationalised banks, punjab farmers, indian express Wheat brought by farmers being cleaned at Khanna mandi in Punjab. (Express Photo: Gurmeet Singh)

The current wheat marketing season has witnessed something that has never happened before, at least in recent memory, in Punjab.

Since the start of the current rabi marketing season from April 1, farmers in the ‘granary of India’ have brought over 61 lakh tonnes (lt) of wheat to its various mandis, of which nearly 57 lt has been procured by government agencies. But they haven’t got the payment for much of this crop — worth almost Rs 8,700 crore at the minimum support price of Rs 1,525 per quintal — that should ordinarily have come within 48 hours of procurement.

Many farmers have been waiting for the past 20 days to be paid even after selling their crop. This is unprecedented for a state, boasting of a well-oiled and time-tested system of foodgrain procurement and payment to farmers through arhtiyas or commission agents in mandis.

The government agencies, in a bid to contain farmers’ anger ahead of state Assembly elections due in less than a year, are now simply procuring the grain landing in the mandis. The idea here is to not make farmers wait endlessly in the scorching heat for selling their crop. But that’s hardly consolation for not being able to get the payment itself.


“I brought my crop to the mandi on April 1and the procurement was done within two days. But no payment has been made for it. The arhtiya, through whom I had sold, has paid a small amount and has asked me to wait for a few days for the full payment. But three weeks have passed and there is no sign of it,” complained Ajit Singh, a farmer near Chamkaur Sahib in Ropar district.

His predicament is shared by Joginder Singh of Kangniwal village in Jalandhar district: “I sold my wheat in the Jalandhar mandi on April 8 and have been making the rounds of the arhtiyas, who say that they will pay me when the government pays them. I have kept my daughter’s engagement on hold only because of not receiving the payment”.

They are not alone, though. The scene is no different in Khanna, which is home to what is believed to be Asia’s largest wholesale grain mandi. Surjit Singh from Poowa, Amarjeet Singh from Mandi Kalan and Avtar Singh from Bhamadi — all villages in Ludhiana district — together sold over 200 quintals of wheat on April 10, 13 and April 18, respectively. They are now awaiting payment from Kamaljeet Gill, the arhtiya in Khanna through whom they sold. “There was no Baisakhi for us this time. We were at the mandi that day (April 13), thinking the arhtiya would give us some money. But when he himself has not got anything, what can he give?” remarked Amarjeet Singh.

This situation — in an already volatile state where farmers have suffered from a crash in basmati paddy prices and whitefly pest damage to the cotton crop within the past one year — is the outcome of a freeze in lending to the state government by public sector banks.

Punjab had sought a cash credit limit of Rs 20,094 crore for wheat procurement operations, which the banks had, however, refused to sanction. This followed the Reserve Bank of India (RBI) directing them to provide for potential losses in food credit extended to the Punjab government. A significant quantity of grain stocks, against which this money had been lent in the past, was said to have simply ‘disappeared’, an allegation that the state has denied.

Caught in the crossfire between the banks, the RBI, the state government and the Centre — which has been a mute spectator so far — are the 12 lakh-odd farmers of Punjab. “Why do farmers have to pay for the wrongdoings of the government? Where will we go?” asked Ajit Singh.

Under the existing system, the Food Corporation of India and state agencies like the Punjab Grains Procurement Corporation, Punjab State Civil Supplies Corporation, Markfed and Punjab State Warehousing Corporation procure grain through the arhtiyas, who raise the bills against their purchases. The arhtiyas are issued bulk cheques, which they then deposit and pay farmers in cash. All this is contingent, in turn, on the government agencies having access to cash credit lines from banks.

It is not the farmers alone, though, who are at the receiving end. The arhtiyas who have pending bills are currently not paying even the labourers in the mandis. “We, too, aren’t getting any money for loading, unloading and cleaning the grain, apart from filling and stitching of bags,” observed Charan Singh, president of the Khanna Mandi Labour Union. Mandi labourers are paid at the rate of Rs 14.03 for every 50-kg bag.

In the last 2015-16 season, Punjab contributed 103.44 lt of the total 280.88 lt of wheat procured for the Central pool. For the current season, procurement from the state is expected at 120-125 lt. Of this quantity, around half has already been procured, even as farmers are yet to receive payments. Some farmers have even started taking their crop to the mandis in Haryana. Haryana, last year, procured 67.78 lt of wheat, which may well be surpassed this time because of distress flows from Punjab.

On Monday, the Punjab chief minister Parkash Singh Badal met Prime Minister Narendra Modi in New Delhi, urging Centre’s intervention, following which the cash credit freeze is claimed to have ended. “About Rs 17,500 crore of credit limit has been sanctioned by banks, which should reach arhtiya accounts in a couple of days. Hopefully, by around April 25-26, farmers should also get their money”, noted Vijay Kalra, president of the Federation of Arhtiya Association, Punjab.

Sukhdev Singh Kokri Kalan, general secretary of the Bhartiya Kisan Union (Ekta-Ugrahan), warned of a massive agitation by farmers if payments are not received within the next 2-3days.


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