BANKING TRADE AND COMMERCE

STATE AID TO AGRICULTURE

State Aid to Agriculture: Granting of financial assistance to agriculturists was prevalent even before the establishment of British rule in India, and such assistance was extended especially during famine years. The British Government activated the system that was already prevalent, and gave it a legal status. The agriculturists' riots that broke out in several districts of the Deccan only helped to expedite the legislation in that regard.

The Land Improvement Loans Act of 1883 and the Agriculturists' Loans Act of 1884 provide the legal frame-work under which tagai loans are granted to the needy agriculturists. The former Act is broadly concerned with the long-term finance, while the latter provides short-term financial needs.

Land Improvement Loans Act of 1883: Loans under this Act are granted to cultivators for improvements in land of a permanent nature such as irrigation, drainage, reclamation, protection of land from floods, soil erosion, etc. The Collector, Prant Officers or Mamlatdars are authorised to grant loans upto a certain limit. The interest rate for these loans is generally 8½ per cent, but in particular cases a reduced rate or nominal rate of interest is charged if the Collector so recommends.

The Act makes it imperative on the part of the loan-granting authority to satisfy himself as to the sufficiency of the security offered by the agriculturist with a margin of safety. Movable property is rarely accepted as security. Personal security is also accepted in rare cases if the person is solvent. The security of immovable property is invariably demanded where the amount of loan applied for is large.

Agriculturists' Loans Act of 1884: Loans under the Agriculturists' Loans Act of 1884 are granted to holders of arable lands for purchase of seeds, fodder, cattle, agricultural implements, re-building the destroyed houses, maintenance of cultivators till the harvest and so on. As in case of the Land Improvement Loans Act the Collector, the Prant Officer or the Mamlatdar is authorised to grant loans upto specified limits under this Act as well. Loans above Rs. 2,500 have to be referred to Government for approval. The interest to be charged is again at 8½ per cent. The conditions of security are the same as those under the Land Improvement Loans Act of 1883.

In tables Nos. 9, 10 and 11 are given the statistics of tagai advances, recovery of loans and outstanding balances under the Land Improvement Loans Act, 1883 and Agriculturists' Loans Act, 1884 as furnished in the old Gazetteer of Ahmadnagar district and the Supplementaries to the same:—

With a view to improving the condition of the agriculturists, the scheme of granting financial aid has been extended further on progressive lines. The system of distribution of tagai loans is modified to accord with the progressive principles of agrarian development. Besides the revenue authorities, co-operative societies and the Zilla Parishad are also authorised to give financial assistance to the agriculturists. The amount of assistance also has been substantially increased so as to cover a larger coterie of clients.

TABLE No. 9—TAGAI ADVANCES, COLLECTIONS AND OUTSTANDING BALANCES [Gazetteer of Bombay Presidency, Ahmadnagar District, Vol. XVII-B, 1904.]

TABLE No. 10—TAGAI ADVANCES, COLLECTIONS AND OUTSTANDING BALANCES UNDER THE LAND IMPROVEMENT LOANS ACT, 1883, AND THE AGRICULTURISTS' LOANS ACT, 1884 [Gazetteer of the Bombay Presidency, Ahmadnagar District, Vol. XVII-B. Supplementary, 1913.]

TABLE No. 11—TAGAI ADVANCES, COLLECTIONS AND OUTSTANDING BALANCES UNDER THE LAND IMPROVEMENT LOANS ACT, 1883, AND THE AGRICULTURISTS' LOANS ACT, 1884 [Gazetteer of the Bombay Presidency, Ahmadnagar District, Vol. XVII-B Supplementary, 1926.]

With the advent of Independence, the agricultural sector of the district economy received top priority as far as Government assistance is concerned and necessary changes were introduced in the distribution of tagai loans. The amount of loans to be granted is also increased with a view to stepping up agricultural production. Besides the Agriculturists' Loans Act and the Land Improvement Loans Act, the Government also provides loans and subsidies to agriculturists under the Grow More Food Campaign.

Tables Nos. 12 and 13 indicate the financial assistance granted to agriculturists under the Land Improvement Loans Act of 1883 and the Agriculturists' Loans Act of 1884.

Inspite of the acute need of credit and financial assistance, an average agriculturist does not regularly apply for tagai loans because of the official procedure involved as also the necessity of making loan repayment regularly which does not always suit the agriculturists.

Agricultural Debtors' Relief Act: Since the beginning of this century there was an enormous rise in the hereditary indebtedness of the cultivators in the then Bombay Province. The state of indebtedness of the land-holding classes became more acute with the passage of time. The provisions of the Civil Code which was passed in 1877 had greatly facilitated the lender in recovering his debts. The Limitation Act of 1869, though it was passed in the interest of the debtors with the object of relieving them from the burden of the old and ancestral debts, was manipulated by the lenders to their own advantage. The bitterness caused by the working of the Limitation Act was intensified by the decrease in the value of land which accompanied the fall of produce prices in 1873 and 1874. Creditors finding a fall in their security values also pressed their debtors which resulted in harassment to them. All these factors led to the agrarian riots of 1873-74. Such riots again took place in Ahmadnagar district in 1875 the intensity of which was much greater than before.

As per the recommendations of the Deccan Riots Commission, Ahmadnagar was included in the area to which the Deccan Agriculturists' Relief Act (XVII of 1879) was made applicable. Under the provisions of the Act no land could be sold in execution of a decree unless specifically pledged; the registration of all lands was made compulsory; and every transaction was to be investigated independently of the bond. The courts had the power to relieve the debtor by decreasing payments by instalments, while arbitration was encouraged by the system of village munsifs and conciliators. The most striking result of the Act was the extraordinary check to litigation. The Act, in short, was intended to reduce the aggregate indebtedness of the farmers and restrict the transfer of land from the cultivators to moneylenders. This Act was later repealed and replaced by the Bombay Agricultural Debtors' Relief Act (XVIII of 1939) which aimed at compulsory scaling down of debts and subsequent arrangement for the repayment of the adjusted amounts in manageable instalments.

A number of other changes were also introduced by this Act. The term 'agriculturists' as defined in the Deccan Agriculturists' Relief Act, 1879, was found to be actually bringing into its fold not only the genuine agriculturists of the cultivating class but also pseudo-agriculturists who merely happened to own land but did not cultivate it. As against this, the term ' debtor' as defined in the Bombay Agricultural Debtors' Relief Act was more definite. Under the Act 'debtor' meant an indebted person who was a holder of land and who cultivated land personally. Further, the income of the debtor from sources other than agriculture must not exceed 33 per cent of his total annual income or Rs. 500, whichever was greater. Income from land cultivated by tenants was regarded as non-agricultural income under the Act.

The Act was amended in 1945 and 1947 with a view to bringing relief to agricultural debtors and for remedying certain other defects which the working of the Act had brought to light. The Debt Administration Boards were dissolved and the administration of the Act was entrusted to civil courts. The latter, however, were not entitled to administer such cases where the total amount of debts due

TABLE No. 12—FINANCIAL ASSISTANCE TO AGRICULTURE, AHMADNAGAR DISTRICT

TABLE No. 13—GOVERNMENT FINANCE FOR AGRICULTURE CLASSIFIED ACCORDING TO PURPOSE, AHMADNAGAR DISTRICT

from the debtor was more than Rs. 15,000. In case of two or more applications for adjustment of debts it was decided to consolidate them.

The main purpose underlying the enactment of the Act was to bring down the inflated volume of the debts of the agriculturists reasonably within the limits of their repaying capacity and to make them entirely free from the burden of debts by making arrangements for payment of such debts in easy instalments. By and large the objectives of the Act have been achieved to a considerable extent. The implementation of this Act has relieved the heavy and long-standing burden of debt on the agriculturists in the district.

It was found that soon after the implementation of the debt relief legislation there was shortage of credit facilities. Under the conditions enforced by the above Act the creditor took a gloomy view of future risks. A more specific problem was the adjusted debtor himself; for him it was not so much a case of contraction as of elimination of all private credit. The very process of adjustment involved so many restrictions on the alienability of his property that no lending agencies could be expected to be disposed favourably towards him. Meanwhile the adjusted debtor would have to raise crops and before that to raise money for the crops.

The Government, realising these difficulties of the debtors, instituted a system of crop or seasonal finance which was intended to fill in the vacuum in the credit facilities caused mainly by the progressive legislation regarding debt relief, money-lending and land tenure.

The provision for crop finance was initially made through the principal agencies of (1) co-operative societies, (2) revenue authorities (loans), (3) grain depots and (4) authorised money-lenders.

As far as possible, however, the crop or seasonal finance was being advanced through the co-operative societies to the persons, who were parties to the proceedings as awards under the Bombay Agricultural Debtors' Relief Act. The advances by way of crop or seasonal finance are secured by the crops grown by debtors. These advances are essentially short-term in character and their chief object is to finance agricultural operations at reasonable rates of interest.

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