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Punjab, Haryana fear arhatiyas after Modi govt nudges them to pay farmers directly online

Central govt has been trying to implement online payment system for farmers of Punjab & Haryana since 2012, as it will ensure transparency.

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New Delhi: Just days after the Modi government again nudged Punjab and Haryana to ensure direct online payments to farmers, Haryana has said it is prepared to but Punjab is not quite ready.

Punjab’s Congress government said it has the infrastructure in place but cited legal provisions to say arhatiyas or middlemen can’t be removed from the chain of payment just yet.

The central government’s push for direct online payments comes ahead of the rabi wheat harvest season.

Within Haryana, too, arhatiyas have threatened a boycott of the upcoming wheat harvest season if the state government implements the shift, saying farmers will support their protest as well. Similar protests have emerged in the two states on earlier occasions when the proposal has come up.

The central government has been trying to implement the online payment system for the farmers of the two states since 2012, as it will ensure transparency and plug the gap in the disbursal of money to the farmers. This is not linked to the contentious farm reform laws enacted by the Narendra Modi government, but is part of a larger push to free farmers from middlemen and ensure better prices and prompt payments.

The calls for direct online payments to farmers have, however, drawn opposition from the arhatiyas, a cog in the procurement chain through whom payments to farmers are primarily routed in Punjab and Haryana. 

Arhatiyas, who are also known to provide loans to farmers, earn a commission of 2.5 per cent off the procurement they facilitate. Direct online transfers to farmers, they say, will put them at a disadvantage.

Also read: Everyone agrees farm reforms are needed. Here’s how Modi govt can break political deadlock

Road ahead for Haryana, Punjab

In the kharif procurement season 2020-21, Punjab and Haryana accounted for nearly 40 per cent of the total paddy procurement of 651.07 LMT across the country. Punjab contributed 202.82 LMT, or 31.15 per cent, and Haryana 55.35 LMT, or 8.5 per cent. 

Both governments have partially covered farmers under online payments, but have faced multiple technical glitches. Protests by arhatiyas have proved a hurdle as well.

As a result, a large chunk of the money has so far been paid offline through arhatiyas.

Speaking to ThePrint, Anurag Rastogi, Additional Chief Secretary in the Haryana Food and Civil Supplies Department, said “we are all set to provide direct payment to farmers into their account for their crop via online method this year”. 

“In the upcoming rabi procurement season, we estimate to procure 80 lakh metric tonnes (LMT) of wheat, for which we will make direct online payments to farmers.”

Rastogi acknowledged glitches in the E-Kharid portal, launched last year as the “state’s first attempt to directly credit farmers’ payments into their accounts”, but said their IT department “has overhauled the system again and we are confident” of going ahead with the initiative this year.

A senior official in the Punjab food and civil department said they are ready to make the online shift but added that they “can’t remove arhatiyas from the payment system”. 

Arhatiyas, the official added, have a “statutory power under the state APMC Act to receive payments on behalf of farmers”.  

“The practice of commission payable to arhatiyas is governed by statutory provisions of the Punjab Agriculture Produce Marketing Act, 1961, and the rules framed thereunder,” the official added, refusing to be named. 

Rule 24A of the Punjab Agriculture Produce Markets (General) Rules, 1962, mandates that this commission shall be payable at the rate of 2.5 per cent of the sale price of wheat-paddy.

We started the online direct payment system for farmers in 2020 under the Anaj Kharid portal, for payment to farmers through arhatiyas. However, due to Covid restrictions, KYC and other verification of arhatiyas and farmers under them couldn’t be completed, so we couldn’t make all the payments through the online direct mode last year.”

Discussing a possible alternative to direct payments to farmers, the official said, “We can… release the commission of arhatiyas once he credits the farmer account with his full money, failing which we can penalise them.” 

The state, the official added, has “a database of over 12 lakh farmers and their arhatiyas”, devised during the ongoing kharif paddy season. 

A senior official in the Union Department of Food and Public Distribution said “direct payment in the accounts of farmers will not only lead to a better price realisation by removing various intermediaries, but also enable them to repay existing debt according to their capacity”.

“With the complete implementation of online mode of payment for farmers, not only will they receive the payment in 48 hours into their accounts, but the Food Corporation of India (FCI) will also credit the state procurement agencies with the subsidy amount within 72 hours of purchase,” the official added.

Under the online payment systems in place in these states, bank account numbers of arhatiyas and the farmers under them are linked to the Centre’s Public Financial Management System (PFMS) network, which allows direct transfer of MSP into farmers’ accounts.

Arhatiyas’ objection

In the past, whenever the central and state governments have pushed for direct online payment to farmers accounts, arhatiyas of Punjab and Haryana have halted the crop procurement procedure. 

They often leverage their crucial role in facilitating procurement — they are involved in cleaning, packing, processing and weighing crops brought in by the farmers at mandis — to force a reversal.

Amarjeet Singh Brar, vice-president of the Federation of Arhtiya Association in Punjab, said the “state government understands our concern that our role is essential to farmer survival while fulfilling their daily financial needs”. 

“It is the central government that is adamant on implementing this unreasonable method of payment in the state. We only charge for what is rightfully our share for services provided during procurement. After all, we also need money to pay labourers and office staff,” he added. 

Arhatiyas say direct payments to farmers will destroy the mandi system of both states in a few years.

Arhatiyas have also been crucial in making this country food-surplus as we take care of both personal and farm-related financial needs of farmers, so that they can cultivate their crops with utmost efficiency,” said Ashok Gupta, president of the Haryana Arhatiya Association. “No farmer or arhatiya has called for a payment reform, then why is the Centre forcing it on us?”

He said there is “no reason why we won’t make payment to farmers”. “We are so dependent on each other, not one farmer has ever complained about payment default from arhatiyas. If this direct payment system is implemented, the efficient mandi system of Punjab and Haryana will be destroyed in the next four years.” 

If the government “forcibly tries to implement this payment method, we will halt the wheat crop purchase in the upcoming season by withdrawing our services like weighing, cleaning and packing of crops”, he said. 

“Our farmer brothers will also join the boycott of the procurement process if the government remains adamant on this payment method,” he added.

Also read: Modi govt must hold firm on farm reforms, more than just laws are at risk


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  1. Everyone disbursing the funds starts extorting, the Arhatiyas cannot be any different. It is the control of the money which is used to buy support or harass the dependent farmer. If the farmers receive the payment in 48 hours into their accounts, the extortion will end overnight, the farmer will need no credit from Arhatiyas and will not have to pay an exorbitant rate of interest, at times even mortgaging the small piece of land he has.
    On line payments can easily be split in three components 1. to farmer for the produce 2. to Arhatiyas for his commission 3, to Arhatiyas for his services and administration.
    NO BUT Arhatiyas Want all to themselves this is the broker culture created since independence. With the rulers thriving on it.

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