The Punjab assembly on Tuesday passed the “Punjab Settlement of Agricultural Indebtedness Bill, 2016”. The long-awaited bill, which sailed through smoothly without much discussion, seeks to provide a framework for determination and settlement of non-institutional agricultural debt. The bill, though loosely construed as a one-time settlement (OTS) scheme for debt-related disputes of farmers with arhtiyas (commission agents), is much more than that. HT takes a close look at the bill:
Objective of the bill?
The aim is to reduce stress on farmers and agriculture labour through fair settlement of debt-related disputes and reduce litigation in courts. Once the Act is notified, the most immediate benefit will be in cases where the debtor has paid an amount equal to double of the principal amount.
The forums/tribunal set up under the new Act will have the powers to declare the debt as having been discharged and waive the entire loan amount with interest as well as order the release of any property pledged or mortgaged by a debtor whose debt is decided as having been discharged.
However, its provisions are limited to only non-institutional agricultural debts upto Rs 15 lakh – mainly loans given out by arhtiyas. The bill does not cover rural indebtedness – in other words, loans taken by villagers for activities other than agriculture or institutional loans.
All disputes of loan amount upto Rs 15 lakh pending in civil courts will be transferred to these Forums from the date the Act is notified and jurisdiction of Civil Courts has been barred in such cases. The forums will have to decide disputes within three months. In case the forum or tribunal needs more time, a clear reason will have to be cited.
What does the bill entail?
Once the Act is notified, district level agricultural debt settlement forums and a state level agricultural debt settlement tribunal will be set up to alleviate difficulties of farmers in getting their non-institutional debts agriculture reconciled and settled. The district forums, headed by a retired/serving district or additional district session judge, will comprise two more members – one representative of farming community and another representative of money lenders.
The tribunal, headed by a retired Judge of the high court, will have two more members. Their term will be three years. Any debtor or creditor of agricultural loan will be able to file a petition before the district forum for settlement of their debt. If aggrieved with the order, he or she can file an appeal before the tribunal.
As per the bill, the orders of the tribunal can be challenged in high court. It also empowers the government to prescribe a maximum rate of interest which can be charged by the creditors on non-institutional loans provided by them. Each creditor will be requir-ed issue an authenticated passbook to the debtor.
Is Punjab the first state?
No. The legislation in another form was adopted by Haryana in 1989. A central act of 1934 also gives similar powers of settlement of such loan to deputy commissioners. What’s the quantum of non-institutional agriculture indebtedness in Punjab? How does it compare with institutional indebtedness?
Agriculture indebtedness in Punjab is estimated to be over Rs 36,000 crore, including Rs 12,000 crore of non-institutional loans advance given by arhtiyas. The rest is institutional loans. Then, there is non-agriculture rural indebtedness of another Rs 27,000 crore.
What necessitated this bill?
With crop failures, falling productivity and shrinking margins, farmers, especially small and marginal ones, have been reeling under debt. The exploitation by arhtiyas has only made the situation grim, leading to increase in farmer suicides. There have been demands from time to time for government intervention. The legislation was first envisaged in 2001 and then again in 2006 to reduce the possibility of exploitation of farmers at the hands of moneylenders. But it has finally close to becoming an Act.
What next for the bill?
The bill passed by the state assembly will now be sent to the governor for his assent. Once the assent is given, the rules under the Act will be framed and notified. The Act comes into being once the rules are notified. The department of agriculture under the financial commissioner development will enforce the Act. But there is a major challenge ahead. The loans from private moneylenders usually do not have proper paperwork and their reconciliation will be difficult.
What is politics in the bill?
With assembly polls round the corner, the SAD-BJP alliance is on a spree to announce sops for all sections. The government, in its budget for 2016-17 last week, had come up with multiple schemes, including insurance cover, interest-free crop loan and a provident fund-cum-pension policy, for farmers. The Akalis, who have been in power for nine years, kept sitting on it all along. While they would deny any political motives, the timing suggests otherwise.