When farmers bore the brunt

Credit, Rural Debt & The Punjab Peasantry

by Sukhdev Singh Sohal.

GND University.

Pages 203. Rs 200

Reviewed by B. B. Goel

In a developing agrarian economy, usury can lead to exploitation and debt peonage. Also, these can further lead to economic inequalities, litigations and transfer of land from producers to non-producers. Sahukars and money-lenders, who in the past acted as custodians of cash or ‘kind requirements’, later began to dictate terms and exploit people. This book by a renowned historian sheds light on the deplorable conditions of rural indebtedness of Punjab peasantry during the Colonial rule.

Agriculture was a highly speculative venture in British India due to fragmentation of holdings, water-logging and coercive policy for collecting land revenue. Population growth, price fluctuations, international price system, famine and several draughts skimmed-off economic surplus which peasantry had generated. In such a scenario, indebtedness became an integral part of the rural economy.

British colonialism was geared up to preserve imperial rule through juridical, institutional and monetary instruments. It acted as a mid-wife that helped in the birth of European capitalism. It cleverly brought transformation of property laws and ensured punctual payment of land revenue, thereby accelerating monetisation of agrarian economy and free flow of resources. Punjab became a heavily indebted province owing Rs135 crore out Rs900 crore debt, but constituting barely 7 per cent population of India.

Great Depression further weakened the economy, disrupted capital, forced distress selling of gold, impoverished peasantry, and turned creditor-debtor relationship into landlord-tenant one. After abolition of usury regulations, money-lenders started to get possession of land themselves and devised crude ways to fleece peasants: Grain debt was converted into cash if prices were higher; blank spaces were left in books to justify fictitious balances; false witnesses were produced to get decrees against debtors. They circumvented acts and customary laws through benami transactions to keep usury all pervasive. They became owners of farmers’ land licensed by the British Raj.

Cooperatives raised to rescue farmers from poverty, too, failed to make any effect and rigid rules of paying off loans again forced farmers to approach moneylenders. These were rightly labelled as initiatives guided and controlled by government as these barely touched 11 per cent population. Highlighting the plight of peasantry, Famine Commission criticised land revenue system that forced farmers into debt. On the other hand, while Maclagan Committee felt that indebtedness instead of decreasing tended to increase.

British did not institutionalise credit supply through official channels. Necessity of credit therefore created more debt. In between, a contradictory theory also suggested that volume and burden of debt was positively related to prosperity but contemporary nationalists vehemently challenged this myth. They argued that in the absence of any financial network, cooperatives too helped government instead of rescuing peasants.

Professor Sohal deserves appreciation for writing about the miseries of people and peasants of rural Punjab exploited by the Raj to route wealth to their country. The book is lucidly and interestingly well supported by earlier research writings.