Watch: Can Punjab Get Rid of the ‘Exploitative’ Commission Agent System?

With political parties appealing to both farmers and arthiyas, The Wire spoke to one of the leading arthiyas in the Sangrur grain market about their role in the farmers’ debt crisis, institutional alternatives and the election promises being bandied about.

Sangrur, Punjab: Arthiyas, commission agents who also double up as money lenders, are arguably the most influential people in the state’s agricultural market. Capital-intensive farming and increased mechanisation after the Green Revolution have necessitated the existence of non-institutional sources of finance, of which arthiyas form a major part. With increasing rates of farmer suicides in the state (Punjab is second on the list of states with most number of farmer suicides), arthiyas have received a lot of criticism for charging exploitative interest rates and insensitivity towards farmers.

With political parties appealing to both farmers and arthiyas, The Wire spoke to one of the leading arthiyas in the Sangrur grain market about their role in the farmers’ debt crisis, institutional alternatives and the election promises being bandied about. You can also read the full transcript of the interview below the video.

One of the main reasons for farmer suicides is debt. Loans are given by you as well. Do you think commission agents are responsible for these suicides?

The first thing to understand, which the media never explains, is that the role of a commission agent has many layers. The system of commission agents in Punjab is very old and it has many layers depending on different regions in the state. For instance, if you go to the Majha region in Amritsar and Gurdaspur you will find that the rate of interest is still 24%. Whereas it is 12% in Sangrur, Barnala and Patiala. Therefore, the system of commission agents is fluid, it varies depending on the region.

A 12% rate of interest given by commission agents is very reasonable. In fact, banks may be charging a little more.

It is common in any trade that there might be a few people who cheat. It can be observed in this trade as well. The commission agent has a direct relationship with the farmer. The agent provides a loan. The farmer has borrowed from both the bank and the commission agent. The loan is not being repaid and that is when some commission agents capture the land of the farmers. That is what happened in some places in Punjab. So that is why one hears about the exploitation by commission agents in this matter. But it is important to understand that the farmer is getting exploited by this entire system. The commission agent is just one aspect of it.

Why do political parties support the system of commission agents?  

I have noticed that political parties are also trying to appeal to commission agents in their campaigns. For instance, Captain Amarinder Singh has said that he will not allow the system of commission agents to be abolished in Punjab. What do you have to say about this? According to your understanding, what kind of agents is he talking about? The kind which you said act like banks or the kind that exploit farmers?

I will tell you how it is. Some things require a practical outlook. The system of commission agents is such that we don’t have a solution for it currently. No political party has a solution. And why? Consider an instance where a farmer is ill. He calls up a commission agent and asks for a sum of Rs 20,000 – Rs 50,000. You can’t find such easy access to finance anywhere. You cannot create a bank that can loan out Rs 50,000 in an instant. In Punjab, people are able to borrow up to Rs 5 lakhs instantly.

Captain Amarinder Singh is a practical man. He understands this problem and that there is no immediate solution available for it. You might want to eliminate the commission agents but there is no alternative system to replace them. That is why Captain Amarinder is speaking for them.

Nobody was getting money when demonetisation happened. We wrote cheques to the farmers and asked them to go to the banks. So farmers are cursing those who want to abolish this system of money lending. They are against this. Politicians who understand these practical matters are against abolishing this system in order to not alienate the farmers.

Why don’t political parties think of creating public institutions to replace the Arthiya system?

You’re saying that this system of money lending is useful, that it provides farmers with immediate financial access. But you also said that there are many agents who exploit helpless farmers. So as an alternative, can’t the state itself create institutions which make finance easily available and also ensure that farmers are not exploited? Do you think any party has the political will to create such an alternative structure?

Currently there are three parties in Punjab – AAP, Akali Dal, and Congress. None of their manifestos mention this topic. When you agree that the biggest problems in this society are the suicides or the debt but yet you don’t talk about it – instead you promise to provide scooters and mobiles – what does this mean?

If you want, you can abolish the system of commission agents in Punjab. But before that you must establish a workable alternative to this system. The commission agents have no problem with this. The government can also regulate the interest rates among the agents. Why doesn’t it do this? The income tax people take money from us. They coerce us to pay up if we don’t want any trouble at the shop.

Basically, this is a cycle. Farmers are compelled to borrow from money lenders, who are in turn coerced to pay income tax officers. That is why there is no political will to resolve this because it is running like a parallel economy.

No. Look, the inspector assigns a price to the grain and demands money from us. They take one rupee for every sack weighing 50 kilos. If your shop receives 30,000 sacks of grain, then they’ll ask for Rs 30,000. The income tax officer demands money, the sales tax officer demands money, the people in the market ask for money. Everyone demands money from the money lender and they give it to them. Why do they give the money? Is it because the politicians don’t understand what is happening? Politicians understand how the system is functioning, they know we have to bribe the income tax officers, that we have to pay up in the market

Are politicians also receiving some of this money?

Yes, of course.

How is it going to them?

The district magistrates who are in charge of food. There are a few food agencies which belong to Punjab. The persons in charge of these at the district level send money to the local MLAs and ministers.

Bribes must also be given for posting preferences?

Yes. A sum of Rs 50 lakh can even be paid for postings here in Punjab. So it is a matter that involves an entire system. You can hold a particular lobby of commission agents responsible, but not all of us. These suicides can be stopped if the state really wants to do something for the farmers. If someone says that these suicides are happening just because of the commission agents, this is false.

Some arthiyas said that farmers commit suicide just to receive compensation [for their families]. Do you also believe that?

I also heard somewhere that a collective of commission agents said that farmers are committing suicide just to receive compensation.

Yes, they have said it. There are two bodies of commission agents. One is with Akali Dal and the other is with Congress. When Congress is in power, the Akali body makes this accusation. When the Akalis are in power, the other body pronounces the same accusation.

But what do you think about this? Is this true about the farmers?

No, it is not. This is not the right way to understand things. It is not so that a person will commit suicide or kill someone just to get money. I don’t believe in this. In the 15-20 years of our family business, none of the farmers we have dealt with has committed suicide, and none of us has gone to court about any case regarding these matters.

Are political parties addressing this problem in their manifestos?

A final question. All the political party manifestos are out and all of them mention something about the farmers because it has become such a big issue. After Maharashtra, Punjab has the second highest number of farmer suicides in the country. This has become a national issue and parties are compelled to address it in their manifestos regardless of their political will to act on it. Do you think what the three parties are saying in their manifestos can effectively address this issue or help reduce the incidence of farmer suicides?

I have skimmed through the manifestos. Akali Dal published theirs yesterday. None of the manifestos have anything that addresses the subject. They make a generic promise that they will forgive the farmers’ debts. How will they do it? Where will they get such a large amount of money? During Captain Amarinder’s government, Punjab farmers had incurred a debt of Rs 57,000 crore. Where will this money come from? Kejriwal has said that he will implement the Swaminathan Report. But can the chief minister of a state do this? This is a matter of national policy and only the Centre can implement it. So isn’t Kejriwal’s promise false? I don’t think any of the parties has soundly addressed this problem. I had gone to Parkash Singh Badal’s rally here earlier today. He said he will provide free electricity to the farmers. But how is that useful? Free electricity will only deplete Punjab’s water reservoirs, which are already running low [as farmers run tubewells with the free power]. Secondly, instead of talking about free electricity, why don’t you offer something pragmatic, talk about minimum support prices (MSPs), or offer to give Rs 4-5 lakhs, without interest, for those who have only up to 2 acres of land. I can agree with them if they offer such kind of solutions. Otherwise it is very generic to say that we will tackle farmers’ issues. None of their manifestos have anything.