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Crop procurement begins in 2 days but Amarinder’s fight with Modi govt over payment mode is on

CM Amarinder Singh has lashed out at Modi govt for its ‘one-sided’ decision to impose direct benefit transfer of MSP to farmers. Payments are currently routed through arhatiyas.

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Chandigarh: Government procurement of foodgrains in Punjab is set to begin in two days but there is no end in sight for the battle between the state and the Narendra Modi administration over the direct benefit transfer (DBT) of MSP to farmers.

The Punjab government has opposed the central government’s directive to change the current system, which requires payments to be routed through arhatiyas, or commission agents. 

The role of arhatiyas in the procurement process is guaranteed under Punjab law and, among other things, the agents are known to help farmers with loans through the cultivation season.  

On Monday, addressing the launch of a state-wide kisan mela, Amarinder lashed out at the Bharatiya Janata Party-led central government for its “one-sided” decision to “forcibly” impose DBT on the state. He said the Narendra Modi government was “encroaching upon the rights of the states in its bid to dominate them”.

Last month, the chief minister had written to Union Food Minister Piyush Goyal in this regard. Expressing his government’s inability to make widespread changes in the current system on the eve of procurement, which begins on 10 April, Amarinder asked the minister to postpone the changes till next year.

Goyal wrote back, saying the changes have to be carried out and pointing out that Punjab was the only state that was not implementing them. 

On Saturday, Amarinder wrote to Prime Minister Narendra Modi, seeking continuance of the existing system of payment until a consensus is evolved on the issue of DBT. He also sought a meeting with Modi to apprise him of the concerns of various stakeholders about the new system “before the situation gets out of hand”.

This letter is yet to draw a response.

The Modi government has been pushing for DBT in procurement to ensure better prices for farmers and save them from exploitation by middlemen. But those privy to local realities say the decision is counter-intuitive, noting that arhatiyas play a key role in facilitating credit for farmers, often without collateral.

Also Read: MSP, subsidies are at root of Punjab’s farm crises but its farmers are fighting to keep them

The contentious changes

In March, the Food Corporation of India (FCI), which procures wheat and paddy from Punjab and other states for the central food grain pool, issued a set of directions to the state government to be implemented from the Rabi marketing season (mainly procurement of wheat) beginning Saturday.

It sought the shift to DBT, besides making it binding on farmers/cultivators to present proof that they have the right to cultivate a plot of land, to claim their payment. 

Both these moves, the central government has claimed, are aimed at bringing in transparency in procurement and saving farmers from exploitation. The instructions are among long-standing reforms that the central government has been pushing for years. Punjab has, however, been resisted these changes all these years.

According to experts and Punjab government insiders, one of the most significant roles that the arhatiyas play in the state’s agricultural economy is providing credit to the farmers as and when required. 

There is a fear that if farmers begin to be paid directly for their foodgrains, the arhatiyas may stop extending credit to them.

“There will be widespread shrinking of credit for the farmers. When the arhatiya knows that the payment of a farmer’s crop is going to go through him, he is assured that his credit will be paid with interest. But once he is out of the system, why would he take unnecessary risks?” said Punjab Agriculture Commissioner B.S. Sidhu.

“The banking system has unfortunately not been able to replace the arhatiyas who offer credit without collateral, sometimes more than the payment capacity of the farmer. They provide money during emergencies. The banks require a lot of paperwork and loans are given only for very specific purposes,” he added.

Sidhu said it will be “disastrous for Punjab to break the system of arhatiyas in the absence of an alternative robust system of institutional credit”. 

Also Read: Why 3 new FCI foodgrain procurement orders have triggered anger in Punjab

‘Fraught with problems’

Sidhu said the second requirement, that farmers provide proof of authority to cultivate a plot of land, is also expected to have an adverse impact on the system of leasing land for farming.

According to the state government, at least 50 per cent of the land under cultivation in Punjab is on lease. 

Speaking to ThePrint, a Punjab government official who didn’t wish to be named said most of the lease agreements are “verbal arrangements” and not recorded on paper.  

“Landlords do not want to bring these arrangements on record for two reasons. One is to evade payment of tax on the rent they gather from the leased land and second under various tenancy rules, the tenant, if shown on record as tilling the land, can claim ownership of the land after some years,” the official added.

There are vast tracts of land belonging to NRIs who lease it for years on end without the tiller’s name ever appearing on paper. 

“Now if all this paperwork is needed, they will not risk giving their land on lease as they might lose their land in a few years,” the official added.

Sidhu said, “The new system is fraught with problems. It actually strikes at the delicate socioeconomic balance among farming families.”

Kamaljit Singh, a farmer from Dalla village in Jalandhar, pointed out that the land he and his brothers till is still in the name of his father, who died several years ago. 

“So, who gets the payment now? In many cases, the land is in the name of a brother who may or may not be tilling it. Now the entire family will be dependent on that person to make the payment to the other brothers,” he added.

(Edited by Sunanda Ranjan)

Also Read: Easy money, cycle of debt — why Punjab’s farmers can’t get out of the clutches of arhatiyas


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  1. All arguments fall short of honest methods.

    1. Farmland is in name of father who died years ago… why ?
    2. Farmers get the credit from arhityas… then what is state government for if they cant assure credit to farmers ?

    Many buy grains in other state sell it for MSP in Punjab claiming that they till a land which they dont have.

  2. Why there should be middle man wherever payments are involved. Who are all the benefitiories of the commission earned by this middlemen. Tomorrow some state will say the LPG subsidy debited thru direct transfer to the customers also should be given thru some middlemen. This middlemen who flees the farmers should go.

  3. I suggest a way out. A sudden change to direct transfer to all the farmers will throw the commission agents out of livelihood. Pick out the top 5000 farmers, in terms of the quantum of benefit, to whom the direct credit be given; simultaneously sanction them overdraft limits( wherein money can be drawn by cheque only), at banks of their choice. These overdraft limits may be clean, but in agriloan category. I expect farmers will not draw unless they really need. This arrangement will replace the credit at present being rendered by the arathiyas.
    2. Now, the aradhiyas linked to those 5000 farmers need to find alternative livelihoods. Talk them into becoming truck owners. Give them secured loans to buy trucks to transport produce of the farm land. Or can we not engage them in agro industrial units, to be established anew.?
    3. Let this be on function for 18 months while rest of the farmers continue in the current system of getting their benefits routed through the accounts of the adarthiyas. After 18months enhance the process to cover more, say, another batch of 10,000 and so on.

  4. Never understood this argument that middlemen give loans without collateral so they are some kind of benefactor to the farmers. In reality they charge very high interest rates and are the loan sharks that turn their borrowers into virtual bonded labourers.

    As regards giving loans, are their not banks like Bandhan which stated off as micro-finance companies and still give loans to their borrowers at competitive interest rates and that too at the doorstep of the borrowers?

    At one time, journalists used to analyse every facet of the story and give the way forward, but alas those days are well gone with almost every journalist pushing his agenda with disinformation and misinformation.

  5. Taxpayer’s money can’t be wasted to fill the coffers of arhitiyas. Money should go directly into the accounts of farmers.

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