Jalandhar: Punjab is mortgaged. Yes, you heard it right.

The farmers of the state, who contribute almost a quarter of the total central food grain reserves, are under massive debts. As much as 85 per cent of the total arable land in the state is mortgaged with the banks. Out of the total 41 lakh hectares of land, 34.63 lakh hectares is in the hands of the banks. Farmers in the state have taken out loans worth Rs 73,425 crores. Approximately Rs 37,000 crores has been borrowed by mortgaging movable assets. Of the 6 lakh tractors in the state, 3.5 lakh are mortgaged.

What is worrying is that most farmers are using loans for buying luxury cars, organising lavish weddings for their sons or daughters or even for holidaying abroad. However, many farmers have also taken out loans out of necessity.

Of 343 acres in this village, 286 acres is mortgaged

Basiyan, located on the outskirts of Jalandhar, is a village with a total 343 acres of land. Of this, 286 acres has been mortgaged to banks and private agencies. Small farmers have taken loans between Rs 2.5-5 lakhs while big farmers have taken Rs18-70 lakhs in loans. The price of land in the village is around Rs 70 lakh per acre. Almost every other person of the village is a debtor.

Rs18L loan grew to Rs27L; farmer ended life

Ujagar Singh and his brother Harbhajan Singh from village Palliyan Khurd in Nawanshahar took a loan of Rs18 lakh from a society and a bank four years back. This debt grew to Rs27 lakh in four years. Two years ago, due to crop failure, Ujagar Singh took his life

Farm labourers

There are 1.65 lakh small farmer families and more than eight lakh agricultural workers in the state. They work on the farms and have to take loans from moneylenders for their daily expenses. It is difficult for this demographic to get out of debt. Even big farmers (with 3-10 hectares of land) are taking out loans, which they know they cannot repay.

Three major reasons for the rising debt

1. The youth are not interested in farming

Most of the youth in the state do not want to take up farming. Instead, they want to work abroad. For this, the family’s ancestral land has to be mortgaged. The pressure to repay the loan takes a toll on the head of the family

2. Loans for luxury

Many farmers take a loan to finance luxuries like cars or mansions. .

3 Hope of loan waiver

Many farmers take loans by pledging their land, hoping that it would be waived during the elections.

Banks under pressure

All banks are required to lend 40 per cent of their total lendings to the farm sector. And that is why, they normally do not decline requests for loans from farmers.

Government too under debt

The state government was under a debt of Rs 1,95,978 crores as of 31 March 2018, which will increase to Rs 2,11,523 crore by March 2019. Because of this, the World Bank has refused to lend money to Punjab.

Expert view

Dr Ashwini Kumar Gupta, former director, State Bank of Patiala says, “It is easy to get a loan backed by land in India, which is one of the reasons why a large number of people have become debtors. They do not make a repayment plan. The Kisan Credit Card is another factor. The loans that farmers have taken are bigger than they can hope to repay.