Punjab story shows gap between ‘promise’ and ‘implementation’ of loan waiver scheme

“I know the government cannot do anything about my borrowings from arhtiyas. But why can’t I get relief on my loan from the private bank, at least within the overall Rs 2 lakh limit? And why this waiver in driblets,” asks Singh, who owns a mere 7 kanal (8 kanal make an acre) and mainly cultivates four acres taken on lease. His annual lease rent alone, at Rs 30,000 per acre, is Rs 1.2 lakh.

Singh’s debt woes multiplied after a hailstorm in March 2016, which damaged his standing wheat crop. It reduced his total harvest to just 45 quintals, half of the normal yield. “My payment cycle was disrupted. I haven’t been able to pay my lease rent for the last two years. If they grant me a further waiver of Rs 1.45 lakh, I can somehow pay off my remaining debts and never again borrow from private lenders. By waiving in phases, the government is only worsening our condition and forcing us to borrow more or simply default on loan repayments,” he adds.

Mahinder Singh is among the 3.17 lakh “marginal” farmers, whose debts totaling Rs 1,814.31 crore were waived between January and April last year. A second phase of waiver followed in June-December, involving a sum of Rs 1,689.49 crore and covering the remaining 1.03 lakh marginal farmers. On January 24, the Amarinder Singh government launched a third phase for waiving Rs 1,009 crore worth of cooperative loans – this time, taken by 1.42 lakh “small” farmers, owning 1-2 hectares (2.47-4.94 acres). This phase of waiver is expected to be completed before the Lok Sabha polls in just over two months’ time.

Sansar Singh’s cooperative society loan of Rs 30,000 has been waived, but he still has an outstanding of about Rs 7.5 lakh

The gap between “promise” – made by the Congress party before the Punjab Assembly elections in February 2017 – and “implementation” is something that even the supposed beneficiaries of loan waiver are highlighting. Technically, the waiver is meant for all marginal and small farmers against their outstanding crop loans of up to Rs 2 lakh from cooperatives as well as public sector and private commercial banks. In reality, though, only the loans of marginal and now small farmers – that too, taken from just cooperatives – have been waived.

Gurbax Singh, a “small” 2.75-acre farmer from Dasgran village in Anandpur Sahib tehsil of Ropar district, received a waiver of Rs 77,996 on his outstanding dues to the local PACS only last week. The 5o-year-old’s grouse is that it should have come earlier. “I have a Rs 3 lakh loan from the Punjab Gramin Bank and have been paying Rs 12,000 interest on it every six months. Had I got a Rs 2 lakh waiver at one go, covering all banks, it would have saved me considerable money even against this loan,” he points out.

He is still better off than Sansar Singh (70), who owns 1.5 acres in Kanakwal Bhangwan village of Sangrur’s Sunam tehsil. While this “marginal” farmer’s Rs 30,000 cooperative society loan has been waived, it is miniscule compared to his Rs 3 lakh outstanding to the Punjab & Sind Bank (PSB). Besides, he owes another Rs 4.5 lakh to arhtiyas, who have financed his cultivation on 8 acres of leased-in land.

There is, nevertheless, also the odd lucky story. Charanjit Singh (55) from Menwa village of Kapurthala had Rs 2.6 lakh of outstanding loans, of which Rs 1.6 lakh was due to the PACS and the balance to the Punjab Gramin Bank and the Land Mortgage Bank. “My entire cooperative society loan got written-off, which was a huge relief for me. It is unfair to expect any government to bear the farmer’s entire debt burden,” says a visibly pleased Singh, who farms 10 acres – two of his own and the remained leased – and rears 10 cows.

A more instructive – and not very fortunate – tale is of Gurpreet Singh from Kishangarh village in Moga district’s Nihal Singh Wala tehsil. This 3.5-acre “small” farmer had an outstanding loan of Rs 3.5 lakh taken from the State Bank of India’s Nihal Singh Wala branch. “They had taken post-dated signed cheques from me. I told them that I was eligible for the state government’s loan waiver announced in June 2017. But they still deposited the cheques that bounced. I was, then, booked for default and had to spend six months in jail. The only reason for this was the delay in implementation of the loan waiver,” he alleges. Gurnam Singh and Jagjit Singh, both small farmers from the same village, also received legal notices for defaulting on their Rs 3-lakh credit limit from the Moga Central Cooperative Bank and the PSB’s Moga branch, respectively.

“There are thousands of similar cases of farmers being issued legal notices in Moga, Patiala, Faridkot, Firozpur, Muktsar and Bathinda districts. The usual practice when any loan default happens is to resolve these through civil procedure. But since this government’s loan waiver announcement, even public sector banks have been initiating criminal proceedings against farmers for the slightest delay in loan servicing. Invoking dishonour of cheques and filing criminal cases under the Negotiable Instruments Act to get farmers booked is completely new. The farmer will obviously be compelled to repay under coercion, whether by selling his livestock or borrowing from loan sharks at exorbitant rates,” claims Jagmohan Singh, general secretary of the Bhartiya Kisan Union (Dakunda faction).

Simply put, loan waiver, far from alleviating, is only creating new problems for farmers – by making banks hesitant to lend and also inflexible with regard to repayment.