The murder of a young activist of the Communist Party of India (Marxist), who took on local usurers and their henchmen at Pallipalayam in Namakkal district of Tamil Nadu on March 10, exposed the ruthlessness and deviousness of the age-old illegal system of moneylending. The murder took place within an hour of the victim lodging his second complaint with the police about a threat to his life.
The incident also brought to the fore the related issues of mass deprivation, flawed micro-credit policies, appalling living conditions of the powerloom workers and the unholy alliance forged by rapacious usurers with sections of the political class and the police.
Chief Minister M. Karunanidhi, conceding the demand of the State unit of the CPI(M), has directed the Crime Branch-Criminal Investigation Department (CB-CID) to probe the case.
According to CPI(M) sources, C. Veluchamy, secretary of the Pallipalayam branch of the party, took up the case of sexual assault, about seven months ago, of a young woman daughter of a female powerloom worker who was unable to pay for two months the weekly interest on a loan taken from a moneylender. The sources alleged that the usurer summoned the woman to his place when her mother was away from home and got one of his henchmen to sexually abuse her. The incident, the sources said, was videographed and uploaded on the Internet and circulated on mobile phones.
On the basis of a representation from the victims mother in February, Veluchamy took up the issue with the police and sought action against the culprits. Following the filing of a case, the usurer, R. Sivakumar, and some of his associates were arrested. Shortly after their release on bail, they issued threats to Veluchamy, who then lodged a complaint with the Pallipalayam police on February 25.
Accusing the police of not taking prompt action on the complaint, State CPI(M) secretary G. Ramakrishnan said in a letter to the Chief Minister on March 14 that the tragedy could have been averted if the police had taken preventive measures and sought the transfer of the case to the CB-CID.
The partys activists held protest demonstrations throughout the State on March 15 demanding action against the perpetrators of the crime and urging the government to take steps to end usury. The town itself observed a hartal on that day.
A. Rangasamy, secretary of the Namakkal district unit of the CPI(M), and Asokan, Pallipalayam block committee secretary of the party, said that until two decades ago, powerloom workers had been subjected to corporal punishment even for minor lapses. Sometimes such humiliation ended in fatalities. Though the intensity of such brutalities had come down owing to the intervention of trade unions, even today most of the labour laws and statutory benefits such as provident fund, employees state insurance, medical allowance and specified working hours were yet to be implemented by powerloom owners, they said.
According to them, as of now there are around 25,000 looms in Pallipalayam employing 50,000 workers directly or indirectly. Each worker in direct employment has to manage two or three looms for 12 hours in a shift. In the powerloom sector, where the piece rate system is in vogue, workers have to work all seven days to earn, on an average, Rs.1,000 in a week. Sometimes the whole family is involved in different tasks. Hefty amounts ranging from Rs.25,000 to Rs.1,00,000 borrowed from the employer at the time of taking up the job, often push the worker into perpetual bondage and the usury trap.
With agricultural workers switching over to other trades as rain-fed agriculture offered fewer working days, powerloom owners have a steady supply of workers.
In such a situation, they do not find it necessary to take care of the interests of the workers. The local people want the government to come out with a relief package, including a moratorium on workers debt, the implementation of statutory social security measures for them, and the execution of irrigation schemes.
Incidentally, Pallipalayam, on the banks of the Cauvery river, hit the headlines in the 1990s in the wake of a kidney racket. Poorly paid workers, in an attempt to get out of the quagmire of debt, sold their kidneys for amounts ranging from Rs.30,000 to Rs.45,000.
The onslaught of usury is not confined to Pallipalayam. Its tentacles have spread all over Tamil Nadu, affecting different sections of society, including manual workers, hawkers and small and medium traders. Fearing reprisal from usurers, most of the victims do not prefer police complaints. In the face of threats to their lives, several of them have committed suicide or moved to far-off places.
Ramakrishnan urged the government to tone up the institutional micro-finance system to end usury. The CPI(M) would intensify the struggle against usury, he said, and called for steps to implement the laws against usury in letter and spirit.
Functionaries of non-governmental organisations (NGOs) and human rights organisations claimed that most of those who were in this illegal business belonged to dominant castes, particularly in the southern and western districts, and that they enjoyed a lot of political patronage. The kattapanchayat (kangaroo court) and usury were inseparable like Siamese twins, they said.
Madurai is said to be the usury capital of the State. According to S. George Virumandi, secretary of the Usury Atrocity Prevention Movement, usurers form syndicates to carry out their operation with clear jurisdiction, using unaccounted money held by politically influential people. Moneylenders would get the signatures of borrowers on plain stamp paper and blank promissory notes and keep the certificates of registration of vehicles and documents of immovable property belonging to them.
George Virumandi said a good number of moneylenders at Sellur, Karimedu, Kamarajarpuram and S.S. Colony in Madurai town and Vadipatti, Usilampatti and Tirumangalam in the district had the capacity to disburse loans of Rs.1 crore and more. They financed film production. Some of them even had clients in Andhra Pradesh and Karnataka. He said Section 138 of the Negotiable Instruments Act should be amended in such a way that the burden of proof was on the usurer. Highlighting the human rights violations by usurers, Henri Tiphagne, executive director of Peoples Watch, said the strategies adopted by them to collect arrears included abduction of poor and powerless defaulters or their womenfolk and their detention in secluded farmhouses where they are beaten up. They enjoy political patronage and have diversified their activities, setting their sights on disputed property and sick industries.
K.R. Ganesan, general secretary of the Federation of Tamil Nadu Rural Development and Local Administration Employees, said around 95 per cent of regular sanitary workers of the local bodies were the worst affected as they had surrendered their bank passbooks to moneylenders against loans taken.
Leaders of bank employees federations felt that adopting a pro-people banking policy would help end the illegal lending system. C.H. Venkatachalam, general secretary of the All India Bank Employees Association, said: Of late, there is a trend in the banking sector that works contrary to the aims and objectives of bank nationalisation.
He said that in the 40 years after nationalisation, public sector banks (PSBs) had gone to villages with as many as 40,000 rural branches and made credit available to agriculture and other priority sectors. However, given the enormous needs of the rural economy, there is a great need for expansion of the PSBs to achieve total financial inclusion. He pointed out that the reports of the Arjun Sen Gupta Committee and the Tendulkar Committee had revealed the magnitude of the appalling conditions of people living below the poverty line.
Today, more than 54 per cent of the population does not have even a bank account and 88 per cent does not have access to banking credit. This has resulted in the common people in rural areas going to usurious moneylenders to meet their financial requirements, he said. The consequences of this were being seen in the increasing number of farmers committing suicide in various States. Referring to the Reserve Bank of India (RBI) reports, he said that at a time when there was a greater need for an enlarged dose of bank credit for vital sectors such as agriculture and small and medium industries and for employment generation activities and poverty reduction programmes, money flowing into rural and agricultural sectors through the banking channels had taken a nosedive in the past 15 years and private moneylending and credit had increased manifold.
The remedy for this lies in reforming the banking credit policies aimed at making rural and agricultural credit available at cheaper rates of interest, simplifying the procedure for extending loans and evolving an easy mechanism for recovery. We have good examples, like credit to self-help groups, where the recovery rate is almost 97 per cent, he said.
He criticised the liberalisation of licensing, as announced in the Union Budget for 2010-2011, for private banks and non-banking finance companies to open branches in rural areas.
Alleging that the RBI was forcing the banks to appoint private business correspondents and private banking facilities to reach out to people who were not covered by banking services, he said the move would only lead to powerful corporate houses gaining control over the rural economy, which was now in the hands of the local oligarchy.
K. Krishnan, general secretary of the Tamil Nadu unit of the Bank Employees Federation of India (BEFI), expressed anguish at the weakening of the cooperative movement, which first took root in the country in 1901. Though after Independence it was strengthened to protect people from the menace of usury, it had gradually gone into the hands of forces inimical to its aims and objectives. The derailed cooperative movement now served the interests of rich peasants, aggravating mass deprivation and farmers suicide.
Institutional credit for agricultural and other priority sectors through cooperative banks, the PSBs and the regional rural banks (RRBs) was a formidable challenge to usurious moneylenders, he said. However, such credit had come down from 64 per cent in the pre-1991 situation to 34 per cent in the wake of globalisation and neoliberalisation, he pointed out.
The RRBs had also started moving to areas close to cities and towns, owing to the profit-orientation imposed on them, leaving farmers and other toiling masses in the lurch, he said. A recent study conducted by BEFI members in three villages Perunazhi and Ponthanguzhi in Ramanathapuram district and Gopalapuram in Virudhunagar district, each with a population of around 6,000 showed that usury still prevailed there. It had also been found that around 100 persons, including local contractors, panchayat functionaries, politicians and illicit arrack distillers, formed a syndicate and carried on the illegal system of lending.
Krishnan insisted that the PSBs, the RRBs and cooperative banks should come forward to provide soft loans at concessional rates of interest to agriculturists and the rural poor. The National Bank for Agriculture and Rural Development (NABARD) also should make an allocation for this purpose from its huge resources earmarked for rural infrastructure development, he said.
Despite the inadequacies in the running of self-help groups, the concept should be encouraged, he said, and added that, above all, political will was needed to end usury.
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