BANKING TRADE AND COMMERCE
STATE AID TO AGRICULTURE
State Aid to Agriculture: Indebtedness is by far one of the most acute problems of the rural economy of the country. Sholapur district also is not an exception to this. The district is known to be a semi-famine area, while parts of the same have a tradition of chronic famines. The frequent incidence of famines and conditions of scarcity hamper the ability of the farmers to invest in the requisite inputs in his land. It is therefore necessary on the part of Government to undertake a liberal programme of providing financial aid for the development of agriculture in the district.
The system of tagai loans is not new, but was actually in operation before the pre-British period. The British administrators adopted the already existing system and a number of Acts were passed between 1871 and 1879. No active assistance however was rendered till the enactment of the Land Improvement Loans Act of 1883 and the Agriculturists' Loans Act of 1884. The former Act is broadly concerned with long-term loans while the latter facilitates short-term financial accommodation.
Land Improvement Loans Act of 1883: Loans under this Act are granted to cultivators for works of improvement on land such as construction of wells and tanks, preparation of land for irrigation, drainage, reclamation, enclosures, etc. The Collector, Prant Officers and Mamlatdars are authorised to grant loans with a rate of interest to the extent of 8½ per cent per annum. In particular cases, however, the Government may reduce the rate of interest or may not charge any interest. The loan is given when the grantor is satisfied as to the security and a margin of safety. Generally immovable property is demanded as security against loans to be advanced.
Agriculturists' Loans Act of 1884: Loans under this Act may be granted to holders of arable lands for purchase of seed, fodder, agricultural stock or implements. They are also granted to purchase cattle, to re-build houses destroyed by calamities and to meet the monetary needs of cultivators in regard to tilling their land. The rate of interest, the type of security and the terms and conditions of grant of loan are the same as under the Land Improvement Loans Act of 1883.
Tables Nos. 31, 32 and 33 show the extent of Government assistance under these Acts in Sholapur district from 1893-94 to 1920-21.
Table No. 34 gives the statistics of tagai loans in Sholapur district from 1965-66 to 1969-70 under the Land Improvement Loans Act, 1883 and the Agriculturists' Loans Act, 1884.
Table No. 35 gives the statistics of tagai loans distributed according to purpose, in the district, from 1965-66 to 1969-70 under the Land Improvement Loans Act, 1883 and Agriculturists' Loans Act, 1884.
Agricultural Debtors' Relief Act: Since the beginning of the 20th century, there was an enormous increase in the State of rural indebtedness in the then Bombay Province. The indebtedness of the agriculturists became more acute as the time lapsed. The Civil Code passed in 1877 had greatly facilitated the lender in recovering his debts. The Limitation Act of 1869 was passed in favour of debtors with a view to relieve the debtors from the burden of old and ancestral debts, but it was also manipulated by the lenders to their own advantage. A kind of bitterness was spread over the lenders due to the implementation of the Limitation Act. The bitterness was again 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 pressed their debtors which resulted in harassment to them and the subsequent out-break of the agrarian riots in the district in 1873-74.
The agrarian riots made it imperative on the part of the British administration to enact the Deccan Agriculturists' Relief Act (XVII of 1879) which was made applicable to Sholapur district as per the recommendations of the Deccan Riots Commission. 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 to restrict the transfer of land from the cultivators to money-lenders. This Act was later replaced by the Bombay Agricultural Debtors' Relief Act of 1939 which aimed at compulsory scaling down of the debts and subsequent arrangement for the repayment of adjusted amounts in manageable instalments.
A number of changes, as detailed below, were introduced by this Act. The term "agriculturist" as defined in Deccan Agriculturists' Relief Act of 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. 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 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. According to the provision of clause (iv) of subsection (2) of section 32, the rate of interest in case of awards was not to exceed 6 per cent per annum or such lower rate as might be notified in that behalf by the State Government or the rate agreed upon between the parties when the debt was originally incurred or the rate allowed by the degree in respect of such debts, whichever was lower. In 1948-49 the Government fixed four per cent per annum as the rate of interest for purposes of awards made under section 32 (2) of the Act. In case of awards passed in favour of land mortgage banks under section 33, the banks were entitled to recover the amount due to them from the debtor together with interest at such rate as the State Government might notify. The rate fixed by Government was six per cent for the purposes of awards made under section 33 (3). However, this was raised to 7¼ per cent in 1953-54 by Government notification dated the 12th October 1953.
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 free them from the burden of debts by making arrangements for payment of such debts in easy instalments. By and large, the objectives have been achieved to a considerable extent. The implementation of this Act has relieved the heavy and long-standing burden of debt of the agriculturists in the district.
It was found that soon after the implementation of the debt relief legislation there was a shortage of credit facilities. Under the conditions enforced by the above, the creditor chafing under present losses 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.