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State farm labourers under debt for food, medicine and shelter

58% of the total loan taken by them is spent on these basic requirements

punjab Updated: Nov 04, 2017 11:21 IST
Gurpreet Singh Nibber
Gurpreet Singh Nibber
Hindustan Times, Chandigarh
Punjab farmers,Loan Punjab,Punjab Khet Mazdoor Union
Labourers spending 14% of their loan amount to meet the basic need of food. (HT Representative)

A study on landless labourers in Punjab has revealed that major chunk of debt (58%) on them was to meet very basic needs of life – food, health and shelter.

Each farm labourer is under an average debt of Rs 77,000, and in the absence of a lending system for them, workers resort to take credit from non-institutional sources and end up paying exorbitant rate of interest up to 60% on debt, according to the study conducted by Punjab Khet Mazdoor Union, which was taken into account by the Chandigarh-based Centre for Research in Rural and Industrial Development (CRRID) last week. Lachhman Sewewala, president of the union, led the research team that conducted the study.

As per the report of the study, major chunk of the debt was spent on illness (20%) and building house (24%) — much less on marriages (14%), contrary to the general perception that debt in the rural sector was due to extravagant weddings.

A startling fact came to light that labourers are spending 14% of their loan amount to meet the basic need of food. The combined component of loan for health, house and food constitutes 58% of the total debt.

“Since two major components of debt on labourers relate to house and health, the government must come up with a policy to address the two issues,” said RS Ghuman, professor of economics at CRRID.

Ghuman said, “The Punjab government now doesn’t have the excuse that theirs is no data available.”

The state government has announced a debt waiver of up to Rs 2 lakh for farmers covering 10.25 lakh of them, and issued a notification in this regard a fortnight ago.

As per the figures provided by the Punjab Agricultural University (PAU), there were 20 lakh farmers and 15 lakh labourers in the state.


As per 2015 figures of PAU, since 2000 (when suicides were recorded) 16,000 people connected to agriculture committed suicide out of which 9,000 were farmers and 7,000 were landless labourers. “The number of suicides per lakh is almost same in both the cases, but we are denied waiver package,” said Sewawala, demanding waiver for labourers also.

Notably, Punjab chief minister Capt Amarinder Singh had announced that his government would work out a waiver package for farm labourers also.

The sample size of the study was 1,618 labourers families in ten villages falling in five districts of Malwa region – Bathinda, Muktsar, Faridkot, Moga and Sangrur, and two villages falling in Nakodar in Doaba.

Sewewala said major chunk of loan by nationalised and private sector banks goes to farmers (96% to 97%), leaving only 3% to 4% for farm labourers.

The total amount of debt on sample families is Rs 12.5 crore, with each family sharing an average of Rs 77,083. The sources of debt are landed farmers, money lenders, shopkeepers, goldsmiths, banks, co-operative societies, micro-finance companies and finance companies.

The biggest share (23.16 %) of loans is given by micro-finance companies, which comes to a total of Rs 2.9 crore while loan given by banks and societies is Rs 2 crore, 16.21% of the total debt.

“For these loans, 26% is the standard rate of interest but in the case of a defaulter not being able to pay the installments on time, the rate of interest touches even 50% to 60%,” says the report of the study.

The limit for landless labourers to get loan from cooperative societies is Rs 25,000, but the benefit is rarely passed on to them, the report adds.

First Published: Nov 02, 2017 20:40 IST