Rural Indebtedness In Bengal, The central theme that this study brings into focus is rural-indebtedness during the period from 1935 to 1947. The indebted peasantry posed a great political problem in the 1930 and 40, and hence the Government, in response, had to adopt many policies of great economic and political significance. One of them was the Agricultural Debtors Act of 1935.
The present study mainly looks at the origin and operation of this Act-visa-vis, the debt problem. The first chapter gives an over- view of the literature of the problem examined in the thesis. The exist- ing literature on the problem under study and several contemporary re- ports on the problem have been surveyed in this chapter. The second chapter discusses the problem of rural-indebtedness in Bengal.
The factors that led to the aggravation of the problem of rural indebted- ness, the system of lending and borrowing credit, rate of interest, malpractices of the money-lenders, estimation of indebtedness and its consequence have been investigated in depth. The third chapter deals with the situation arisen out of the great depression and its impact on the agrarian economy.
Rural Indebtedness In Bengal : 1935 – 1947 Contents
Chapter : I
Introduction Of Rural Indebtedness In Bengal
Chapter : II
The Problem of Rural Indebtedness
Chapter : III
The Great Depression and Credit Relations
Chapter : IV
The Legislative Protection to Peasantry
Chapter : V
The Operation of the Debt Settlement Boards
Chapter : VI
The Working of the Debt Settlement Boards
Chapter VII : Conclusion
Bengal agriculture, being dependent on monsoon rains, could never avoid occasional crop failures and consequent indebtedness on the part of the cultivating people. Such indebtedness was rather normal and the agricultural community always took it as a passing phenomenon. Rural deficits were traditionally repaired by loans advanced by mahajans, neighbours and relations.
But indebtedness as a chronic problem began to develop from the closing years of the nineteenth century. By the third decade of the 20th century it posed a real threat to the rural economy. This signal phenomenon constitutes the central theme of our investigation. Attempt has been made to analyse the origin and development of the probles of chronic indebted- ness, on the one hand, and to examine the success and failure of public policies adopted to encounter it, on the other.
The great depression had its effects on the whole economy of Bengal, but no sector of the economy was so badly hit as the agricul tural one. Markets of jute and paddy, the two yeardsticks of peasant economy, collapsed completely. Prices of these commodities fell far below their production cost. Conversely, the prices of essential non- farm products did not fall proportionately. Result was the loss of peasant’s purchasing power.
For keeping agriculture going and also for physical survival only the way out for the peasantry was borrow- Ing. The two major credit sources were the professional moneylenders and landlords. Besides sheer profit considerations, both moneylenders and landlords had to advance loans to the struggling peasants. Money- lenders had to advance new loans in order to recover the old debts, and landlords had to advance loans because with the ruin of tenants they would also ultimately be affected.
‘No Rent to landlord’ slogan was already there in politics. The slogan was likely to be a coality if zamindars did not stand by the peasantry at times of need. Under the circumstances of rising indebtedness and deteriorating relations between debtors and creditors the government had to act. To face the situation series of laws and bye-laws were enacted. These enactmenta solved some problems and at the same time created some new.
The constitutional reforms under the India Act of 1935 raised the status of the peasantry politically. Public leaders were now keen to mobilise mass support because now the masses could vote them to power.
To overcome the depression crisis and also to satisfy the pro- peasant lobies the government enacted Bengal Debtors Act of 1935. This Act embodied the recommendations of the Board of Economic Enquiry which was previously set up to investigate into the economic ailments and make remedial recommendations.
The Board suggested the policy of scal- ing down of debts reached amicably between the creditors and debtorn, a settlement which was to be arbitrated by the local Debt Settlement Board. The amicable settlement of debt was thus taken by the authori- ties as the only panocea to solve the problem of rural indebtedness.
The authorities expected that the operation of the Debtors Act would both improve the agrarian relations as well as restore the shattered economy to its health. The present study finds that the new policy had signally failed to produce desired results.
Finally, it appears that the D.S. Boards under the B.A.D. Act were set up more for political gains than for economic recovery. The operation of the Act drove the traditional financiers to withdraw the capital from the rural credit market. The vacuum was never filled in by adequate institutional credit facilities. Result was the wholesale land transfer which was again facilitated by the amendoont (1938) to the Bengal Tenancy Act (1885).
Shift of mahajani capital from rural areas to urban centres and large scale transfer of peasant holdings are most remarkable factors which tremendously disturbed the traditional structure of society and economy of rural Bengal.
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