Question

discuss the provision of rural indebtedness ​

Answer 1

Hlo beta..

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Thus, the rural indebtedness adversely affects all the aspects of rural life. It hampers the agricultural production and rural economy, reduces the farmer to a landless labourer and poisons the social and economic life of the rural people.

Answer 2

Answer:

One of the major problems concerning to the rural society is indebtedness. This problem is just not related to one individual but is passed on from one generation to the next generation. Taking or incurring debt for the purpose of agricultural production is indeed necessary as it contributes to production.

Ancestral/Inherited Debt:

Most of the rural debts of the present day are inherited from the past and which increases with the passage of time. An inheritor is liable to the repayment of the debt only to the extent of the property inherited by him.

Despite this law, the rural people continue to repay the debts of their forefathers, as they are not fully conversant with law as they are illiterate. As these people are bound by the traditions and values they regard it as their sacred social duty to repay the debts of their forefathers.

ADVERTISEMENTS:

Such increasing debt is passed on from one generation to another making its repayment increasingly difficult, when­ever it is passed on. Thus, the Royal Commission has rightly stated that the Indian farmer ‘is born in debt, lives in debt and dies in debt’.

Social and Religious Needs:

Villagers are mostly bound by the social traditions and customs, which are considered to be sacred and had to be performed. Some of these ceremonies are marriage, births, deaths, religious occasions, etc. The expenditure is usually very high for the performance of these ceremonies. In order to meet these needs, the villagers take loans. As their incomes are not sufficient enough, they are not able to repay these loans. Thus, they remain unpaid and increase with the passage of time.

Litigation:

Generally, the agriculturists in India are involved in various kinds of disputes related to land, property, etc., which force them to go to a court of law. Often, they view it impor­tant to win the case as it is related to the family prestige and honour. Such litigations involve heavy expenditure and time. In order to meet these needs, the agriculturists take loans that they are not able to repay and are caught into indebtedness.

Backwardness of Agriculture:

Indian agriculture is an uncertain business. It virtually depends on unreliable rains for the supply of water. If there are no rains or untimely rains, the entire crop is lost and the credit invested in the agriculture goes waste. As a result, the loan taken for the produc­tive purposes also becomes a burden, leading to indebtedness of the farmers.

Excessive Burden of Land Revenue and Rent:

ADVERTISEMENTS:

Land revenue, where it is levied by the government in some states and the rent payable to the landowners is becoming excessive burden on small farmers. In order to pay these land rev­enue, mid-rent, the farmers take loan. Sometimes, the farmers have to pay these rents and land revenues even during the floods and drought. This make the farmers run into debts.

Defective Money Lending System:

The village money lending system is very much defective. The sole aim of the money­lenders is to extract the maximum from the farmers. The moneylenders make wrong entries in their account books, charge very high interest rates and extract high prices for the goods they sell to the farmers but purchase the farmers produce at very low prices.

In course of time, as the amount debt increases, the moneylenders are much interested in seizing the farmers lands, and other valuable assets than the debt being repaid by the farmers. Thus, the farmers are trapped in the hands of the moneylenders.

Consequences of Indebtedness:

There are many economic and non-economic consequences, which are caused by rural indebtedness. They are categorized into economic, social and political consequences. Let us have a look at them in detail.

Economic Consequences:

ADVERTISEMENTS:

As the farmer is deprived of the substantial part of his produce in clearing the debts, pay­ment of interests and principal amounts, he loses interest in agricultural production. This leads to low agricultural production and income.

The farmer is forced to sell all his produce to the moneylender and he is deprived of selling his produce in the open market and obtaining the prices of the market. Such a situation adversely affects the inducement for work and agricultural production of the farmer.

The trade between the moneylender and the farmer is always beneficial to the mon­eylender. The farmer is priced heavily for what he purchases and receives little for what he sells to the moneylender. Thus, such trade leads to loss of a substantial part of his income.

In the process of obtaining loans, payment of interest and repayment of principal to the moneylender, the farmer often loses his land, as he is not able to repay the loan. As a result, the farmer, the owner of the land, becomes a landless labourer.