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 8 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 8 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.]

Year

Land Improvement Loans Act, 1883

Agriculturists' Loans Act, 1884

Advances

Collections

Outstanding balances

Advances

Collections

Outstanding balances

(1)

(2)

(3)

(4)

(5)

(6)

(7)

 

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

1893-94

7,810

8,480

28,391

950

1,417

1,485

1894-95

19,010

8,612

38,789

1,075

1,085

1,475

1895-96

25,410

11,330

52,869

2,405

1,118

2,762

1896-97

6,55,126

11,731

6,96,263

1,64,347

6,007

1,61,102

1897-98

1,00,470

1,14,196

6,82,538

69,741

1,08,801

1,22,043

1898-99

21,354

1,23,820

5,80,071

54,718

87,711

89,049

1899-1900

3,51,487

34,610

8,96,948

7,11,767

17,022

7,83,794

1900-01

76,890

31,796

9,41,508

8,87,859

18,962

16,51,915

1901-02

72,960

33,530

9,81,311

3,72,824

1,08,867

19,15,607

1902-03

31,000

64,483

9,47,828

2,81,740

1,61,168

14,34,855

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.]

Year

Advances

Collections

Outstanding balances

(1)

(2)

(3)

(4)

 

Rs.

Rs.

Rs.

1901-02

4,45,784

1,42,397

28,96,918

1902-03

3,12,740

2,25,651

23,82,683

1903-04

55,257

3,54,575

20,00,722

1904-05

49,789

30,320

18,75,231

1905-06

5,23,781

19,483

23,78,740

1906-07

1,27,846

1,83,232

23,24,081

1907-08

13,88,122

93,287

23,34,379

1908-09

91,804

1,23,121

23,02,537

1909-10

1,57,624

4,03,528

20,54,381

1910-11

1,02,778

4,40,934

17,15,666

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.]

Year

Advances

Collections

Outstanding balances

(1)

(2)

(3)

(4)

 

Rs.

Rs.

Rs.

1911-12

1,01,390

2,52,892

16,17,511

1912-13

5,62,560

55,126

21,19,988

1913-14

1,51,271

87,026

21,83,093

1914-15

20,709

5,91,554

18,27,217

1915-16

400

6,68,716

16,24,050

1916-17

866

4,27,382

11,97,534

1917-18

872

3,57,139

8,41,267

1918-19

8,86,810

1,65,215

15,62,862

1919-20

16,68,233

3,27,068

31,04,028

1920-21

12,21,342

6,14,414

37,10,956

1921-22

10,83,483

1,84,464

46,09,974

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

Particulars

Year

Loans under Land Improvement Loans Act, 1883

Loans under Agriculturists' Loans Act, 1884

Financial assistance under Grow More Food Campaign

Financial assistance by other Government Departments (subsidies)

Loans

Cash subsidies

(1)

(2)

(3)

(4)

(5)

(6)

(7)

 

Rs.

Rs.

Rs.

Rs.

Rs.

1. Applications pending at beginning of the year.

1964-65

140

786

--

--

--

1965-66

70

296

--

60

--

1966-67

186

250

--

33

--

1967-68

153

161

--

42

29

1968-69

186

162

--

--

--

2. Amount involved

1964-65

40,000

2,60,000

--

--

--

1965-66

30,000

1,49,500

--

30,000

--

1966-67

2,000

1,25,600

--

1,650

--

1967-68

37,500

84,200

--

21,000

14,500

1968-69

48,750

86,900

--

--

--

3. Number of applications received during the year.

1964-65

885

5,296

--

181

338

1965-66

1,366

6,083

--

571

190

1966-67

1,668

9,629

--

169

330

1967-68

1,162

3,960

--

337

1,067

1968-69

1,369

5,235

--

53

25

4. Total amount applied for

1964-65

2,73,000

26,22,936

--

90,500

1,69,000

1965-66

9,44,000

27,37,450

--

75,500

45,000

1966-67

16,96,200

38,64,800

--

1,24,500

1,60,000

1967-68

4,59,500

17,68,822

--

1,12,000

5,33,521

1968-69

3,10,600

26,01,500

--

27,500

--

5. Number of applications sanctioned.

1964-65

758

5,809

--

108

133

1965-66

1,184

4,540

--

96

78

1966-67

876

7,128

--

153

62

1967-68

922

2,806

--

278

717

1968-69

1,186

2,871

--

5

1

6. Total amount asked for in 5 above.

1964-65

1,95,000

17,63,981

--

43,430

66,500

1965-66

4,77,000

20,24,278

--

74,240

39,000

1966-67

2,64,106

27,86,000

--

1,02,300

44,000

1967-68

1,93,739

12,90,692

--

1,49,750

3,58,500

1968-69

3,17,750

14,75,500

--

2,500

--

7. Total amount actually sanctioned.

1964-65

1,95,000

17,07,925

--

2,35,930

80,000

1965-66

4,48,350

16,51,250

--

76,760

43,600

1966-67

1,89,706

21,88,202

--

1,37,705

31,500

1967-68

1,65,439

11,63,213

--

1,45,620

3,57,700

1968-69

3,07,000

12,16,715

--

36,000

2,187.50

8. Total amount actually disbursed.

1964-65

2,55,150

16,51,325

--

2,44,105

80,000

1965-66

5,69,050

16,47,750

--

70,000

43,600

1966-67

2,82,356

21,83,602

--

1,56,147

30,000

1967-68

2,21,189

11,21,979

--

1,21,820

3,58,200

1968-69

3,81,500

11,81,321.16

--

2,800

2,187.50

9. Total loans repaid during the year.

1964-65

2,59,976.86

5,18,149.57

--

--

--

1965-66

1,72,183.33

7,61,881.47

--

760

--

1966-67

3,53,973.37

9,59,481.12

--

16,000

--

1967-68

5,85,628.54

33,49,783.50

--

--

--

1968-69

8,54,655.44

16,97,880.81

--

7,500

--

10. Total loans outstanding.

1964-65

10,36,870.30

10,61,544.94

--

--

--

1965-66

20,12,719.45

28,88,842.65

--

--

--

1966-67

10,27,657.36

32,67,152.34

--

--

--

1967-68

9,64,996.02

32,22,705.15

--

--

--

1968-69

11,33,069.94

24,65,933.07

--

--

--

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

Purpose

Year

Loans under Land Improve-ment Loans Act, 1883

Loans under Agriculturists' Loans Act, 1884

Financial assistance under Grow More Food Campaign

Financial assistance by other Government Departments

(1)

(2)

(3)

(4)

(5)

(6)

 

Rs.

Rs.

Rs.

Rs.

(1) For current expenditure—

       

(a) Seed

1964-65

--

15,000

--

--

1968-69

--

50,000

--

--

(b) Fodder

1964-65

--

1,48,875

--

--

1968-69

--

62,000

--

--

(c) Manure

1964-65

--

35,000

--

--

1968-69

--

50,000

--

--

(d) Farm implements

1964-65

--

50,000

--

--

1968-69

--

--

--

--

(2) Purchase of draught

animals.

1964-65

--

6,14,700

--

--

1968-69

--

3,97,841

--

--

(3) Well-digging and other irrigation projects.

1964-65

--

4,000

39,200

50,000

1968-69

3,750

2,000

1,800

--

(4) Consumption

1964-65

--

--

--

--

1968-69

--

--

--

--

(5) Other purposes

1964-65

--

2,40,000

--

--

1968-69

--

1,54,614

--

--

(a) M. Tractors

1964-65

--

4,000

--

--

1968-69

20,000

--

--

500

(b) Oil-engine and pumping sets.

1964-65

10,000

--

16,230

30,000

1968-69

1,000

--

500

--

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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