Earlier this week 35,000 debt-ridden farmers coursed through Maharashtra, walking 180 km on blistered soles, to converge at Mumbai’s Azad Maidan demanding freedom from debt and fair compensation for their produce. As the government scrounged for solutions, it could’ve done better if it cared to learn from a State not far away — Kerala.

At Payyambalam, on the coast of a tranquil Arabian Sea, in Kerala’s Kannur district, a hall full of men in crisp white mundus tiptoe, to make sure they don’t miss their names being called out. Fans on long pipes whirr from the high ceilings of the colonial government guest house, as farmers from across the district mop their sweaty brows during a February sitting of the Kerala State Farmer’s Debt Relief Commission. “They are here to give this their personal best,” says commission member Narayanakutty, who is part of the seven-member team scheduled to hear at least 500 cases over the two-day sitting.

Forty eight -year-old Nabisa is one of the few women at the sitting. Clad in a burqa, she walks up to the bench when her name is called and greets the members and the bank secretary with a bright smile. In 2000, she had taken a ₹20,000 farm loan from a service cooperative bank in Irrikur town, where she lives and farms with her husband on 10 cents of land. They grow banana, tapioca and paddy, mostly for their own consumption. The crops had failed most years due to drought. Unable to repay the principal amount and the seven per cent per annum interest, she simply wished it away. In 2007, her debt had mounted to ₹32,000, and was growing by the day. When the couple came to know of the commission, they sent in an application for debt relief. Now, 17 years later, the outstanding amount, with penalty, has snowballed to ₹62,000.

The commission grants Nabisa 50 per cent debt relief. That means she still needs to repay ₹31,000 — an amount still way beyond her means. She had heard that the bench could grant upto 75 per cent of a waiver. The bench informs her that it works only for outstanding debts below half a lakh, hence Nabisa is not eligible for it. “I’m going to sit here and wait. I’ll ask again,” she says, clutching close her documents — the income certificate which shows the couple are agriculture labourers earning less than ₹2 lakh per annum each. She also has with her medical documents as proof of her heart problem as well as the birth certificates of her three daughters. But the commission, under the guidelines it abides by, has already done the best it can. The decision wouldn’t have been any different if Nabisa hadn’t shown up in person. The commission is mandated to settle applications even in the absence of the applicants. Nabisa, nevertheless, had travelled all the way hoping to make an impression.

A blueprint

Set up in January 18, 2007 by KP Rajendran, the minister for revenue and land reforms, the commission was constituted in the aftermath of a spate of farm suicides in the State’s high-range districts such as Wayanad and Idukki between the late 1990s and early 2000s. Between 2000 and 2006, mounting debt owing to a fall in plantation crop prices had pushed 528 farmers to commit suicide, though official figures record only 371 of them. The suicides prompted the government to pass the Kerala State Farmer’s Debt Relief Commission Act in 2006, constituting a five-member commission, chaired by Justice Udayabhanu, a retired high court judge. Ever since, the portfolio has changed hands from the revenue to agriculture ministry.

The commission was allotted a budget of ₹130 crore in its first year. Gradually, as the relief made impact, the agriculture ministry budgeted ₹2 crore annually for the commission to disburse across its 14 districts, on a case-by-case basis. The commission began holding three sittings, hearing around 2,000 cases a month in 2007, and has not paused since. Today, they are a seven-member body that has among them a cooperative expert (MO John), an agriculture expert (MJ Jacob) and four farmer representatives (Ummer Pandikasala, Narayanakutty, KK Hamsa and KV Ramakrishnan).

The commission accepts debt relief applications only for loans taken before January 2007 and can waive off up to 75 per cent of the same. Borrowers who have availed government relief schemes previously cannot approach the commission. All prospective applicants need to produce a ration card that shows their occupation as farmers and an income certificate as proof that their net income is below ₹2 lakh per annum. At the Kannur sitting, nearly 300 of the 400 people present in the waiting area met the prerequisites.

Two benches simultaneously hear the cases in each sitting. Pandikasala, commission member on bench two, sits opposite CV Lakshmi, secretary of the Kalliad Service Cooperative Bank. Lakshmi, clad in a neatly pinned up pink cotton sari, looks through her glasses at the files attentively as she calls out outstanding amounts and Pandikasala double-checks before giving his verdict. As Kalliad’s secretary for over 20 years, Lakshmi has seen a lot of bad debt. Today, none of it moves her. She is here to recover the most for her bank.

The conversation between Pandikasala and Lakshmi is a brief, rather civil, haggle as they discuss each case. Pandikasala requests her to round-off the outstanding amount to the lower thousand. Lakshmi is a tough bargainer. A ₹11,600 loan is rounded down to ₹11,500 instead of ₹11,000, which Pandikasala had requested. In each case, the banks bear the loss of a couple of hundred rupees. The commission pays the amount waived off, while the borrower bears the rest. The borrowers are given between three and 12 months to pay off their portion depending on their financial condition. In exchange, the committee wants their word. The bank waits in anticipation, while the borrower uses the time to dissent, argue, plead or question the fairness of it all.

Pandikasala is serving his second term in the commission. “When daily existence becomes a problem, we have to support,” says Pandikasala, a farmer, journalist with a regional news daily and senior party member of the Indian Union Muslim League.

Lakshmi is retiring next April after 32 years in service. “Before I became the secretary, my bank suffered huge losses due to non-repayment. Every rupee matters. I have single-handedly tilted our balance sheets from a loss-making entity to make sure we make a reasonable net profit,” she explains proudly.

The committee has received 4,40,801 applications up until January this year and ₹355.27 crore since inception.

The model, which follows a cooperative approach to mediation and dispute resolution, is considered a success. Last month, a delegation from Rajasthan was in Kerala to observe the working of the commission, hoping to develop a similar model back home.

The road to recovery

Sebastian Aramban’s home, up the sloping narrow lanes of Taliparamba taluk in Kannur district, still smells of fresh paint, and a large ornate idol of a benevolent-looking Christ welcomes visitors. Sebastian is a daily wager, construction labourer and part-time tenant farmer and on an afternoon like this, he isn’t home. Each year, he and his wife Vanaja take on lease an acre of farmland to grow paddy and tapioca. In 2004, he had taken a loan of ₹15,000 at 12 per cent interest from the Pilathara Cooperative Urban Society. It was an allied farm loan to build a cattle shed. But repeated crop failure and their daughter’s wedding hampered their ability to repay. By 2008, their debt had mounted to ₹25,000. Their application was heard by the commission last month and the loan waived off by 75 per cent. Vanaja smiles in gratitude. But their troubles are far from over.

Her daughter stands with a newborn baby at the doorway. Her parents took a loan of ₹4 lakh last year from another bank for her wedding and yet another to renovate their home. “We pay ₹7,000 a month just to pay off the interest,” says Vanaja. She knows that they might never get around to repaying the principal with Aramban’s ₹500 daily wage which is steady only for half the year.

“The poor just keep getting poorer,” says Surendranath, bank secretary of the Pillathara Cooperative Urban Society. “Lavish weddings and grand house-warming ceremonies have become a harmful craze that has gripped the poor,” he explains.

Do many of the requests to provide relief from personal loans come to the commission under the garb of a farm loan? “We call them wilful defaulters,” says Surendranath, who cites that 42 per cent of cooperative banks in Kannur alone are making losses due to wilful non-repayment in short-term loans. “People know that if not the commission, there are always other government schemes that will bail them out of debt,” he says citing examples of recurrent schemes such as Kudishika Nivaranam.

But the committee members see this in different light. “So what if a farm loan has been put to other use that we can’t verify? Recovering debts from a one Nirav Modi will mitigate all of the Indian farmer’s debts for several lifetimes to come. And here we’re talking about an average loan size of a few thousand rupees,” says MJ Jacob, the senior-most member of the commission, serving his third term.

Lessons learnt

Despite its success, records show that only ₹213 crore of the ₹355 crore allocated over the years has been spent by the commission. The reasons are several. In its first two years, the commission received ₹180 crore to aid distressed farmers and stall their suicides. The five-member team couldn’t access the interior areas where agricultural distress was prevalent and hold sittings as frequently as it was needed. It only managed to disburse ₹40 crore from 2007 to 2009. “Since the commission was formed, Kerala has managed to curb farmer suicides,” claims Justice Udayabhanu, taking stock. The commission however, has a few concerns. With 2007 as a cut-off time period, there are fewer and fewer cases that qualify the date prerequisite. “The date must be as recent as possible, so that more people can apply and benefit. Due to the high farm suicides in Wayanad, the time period was extended in the district to accept cases up to 2011. Other districts deserve the same,” says Udayabhanu.

The commission has only been handling cases of cooperative banks, though it is mandated to intervene in cases of private moneylenders, where much of the problem with debt lies. “While we are mandated to do this, the act doesn’t specify how,” says Pandikasala who says that the commission, in exceptional cases, can order the arrest of moneylenders who unfairly extort repayment. It is in these murky waters that real harassment, intimidation and farm stress occur.

As Rajasthan attempts to structure a more localised version of the commission, these are valuable lessons from an experiment that if scaled, might have saved 35,000 farmers from arriving in Mumbai, smouldering with the anger of indignity.