Banks for a Better Future

Prices of essential commodities are on the upward spiral world-wide. Countries producing food grains are starving for the same. Some say its the bio-fuel rush in the West while some in the West think its Indians eating more that caused the crisis. Whatever may be the reasons stated, one undeniable outcome is the enormous burden it placed on the poor everywhere. The food grains shortage followed by price rise has cut into their pockets deeply. In this context exploring local indigenous systems like grain banks that store in times of surplus and distribute in times of need assumes significance. Subrata Singh portrays an interesting case of the grain banks in Orissa and the transformations the system is going through.

The villages are key institutions characterized by a variety of social arrangements designed to insure village members against a subsistence crisis. For these villages, collective action is a very practical matter, a way to get things done and provide for the public good. The villages in Orissa provide us a rich diversity of such collective action in the form of building infrastructures like Community Centers, roads, ponds etc for the protection of their forests through the thengapalli system, voluntary patrolling. Grain Bank in its present form is an indigenous system of banking paddy and other cereals. It has been designed to address the risk of floods and droughts and the scarcity of food grains. This indigenous system has evolved due to the highly frequent natural calamities.

Angul and Dhenkanal districts in Orissa are subject to floods and drought. The riparian tracks on both sides of the rivers Brahmani and Mahanadi have faced repeated occurrence of flood causing harm to the standing crops. But droughts are a more serious calamity in the district owing to its undulating topography and high porosity of surface soil. These districts have faced recurrent calamities in the late 19th and early 20th centuries.

These districts faced acute food shortages due to flood of 1868, famine of 1889, scarcity of 1897, 1908-09, and famine 1918-19. The famine of 1889 is well recorded-

"In the Angul subdivision there had not been a good harvest of winter rice during the previous four years, while that of 1887-88 was on the average not more than 6 annas and that of 1888-89 not more than 8 annas of a normal crop. Considerable distress was reported in the autumn of 1888, and some measures of relief were adopted, the most important of which was the relaxation of forest rules, but a copious fall of rain in September so improved the condition of things that measure of relief were gradually discontinued, except that the forest rules were not re-imposed. In spite of this rain, however, the rice crop was an indifferent one, and a large portion of higher land was left untilled, for there was great drought from October till the following May. The Mohua, mango and palm crops failed both in Angul and adjoining states, and early in the year the agriculturists found themselves unable to keep the field labourers in their service and discharged them. The later were thus suddenly thrown out of employment, and were unable to find work elsewhere. In ordinary years they might have subsisted for some time on edible roots, fruits etc. of the jungles, but unfortunately in this year jungle produce also failed or became very scarce. The labourers, therefore, being suddenly deprived of all sources of subsistence could only be supported by special measures until demand again arose for their services."

(Source: Orissa District Gazetteer, Dhenkanal).

During these periods too, there have been evidences of the existence of institutions like "Debatara Bhoomi" meaning land meant for deity. These lands were cultivated collectively and the grains produced were used principally for festivals, taking care of visitors as well as distribution to the needy. There were the institutions called DESKOTHS (Village Fund) in almost all the villages of Pallahara Subdivision and adjoining areas, from which people took paddy and paid interests varying from 12% to 25% per year. There were also SARVARAKARS who lent paddy to the people and realized the entire loans after harvest. The origin of Grain Bank is not very distinct but according to the opinion of the experts and older generation people in villages these institutions were started to cope with the scarcity of food grains resulting due to frequent occurrences of floods and droughts. These informal institutions were present in most of the villages. The members used to deposit a fixed amount of grains after harvest and later took back the required amount in the lean season paying an interest fixed by the group itself.

These informal village level grain banks happened to catch the attention of the peeping eyes of the government officials. As a result, these were registered at the panchayat level, grouping several villages together. This was probably with the intention of broadening the working of the institution. Slowly the grain banks got converted into cash cum grain society. With the registration of the society, the government and other agencies also became shareholder of the cooperative society. This has been clearly reflected in the third five-year plan in Orissa:

In Orissa, a special problem has been confronted. 2/3 of the areas (except 5 coastal districts) has been covered by Grain Banks. Of these 1800 banks are cash-cum-grain societies. These societies got RBI participation in share. In Orissa, therefore, steps have been taken to convert these societies into a service pattern by suitably amending the bylaw. In the Action Programme, the banks are recognized for revitalization as recommended by Mehta Committee provided they fulfill the following conditions.

§ Keeping the conformity with the action programme and perform multipurpose activities.

§ Recovery of dues should not be below 60% and possibility of becoming viable within 5 to 8 years.

§ Should not be heavily indebted to cooperatives bank and maintain separate account for cash and grain.

From cash-cum-grain society, these took the shape of credit cum-service society, mainly due to the non-availability of grain and to channelize the supplies of commodities, which are to come through PDS, as it was believed that they would be better substitute to PDS. Another outfit of these credit cum service societies have taken the form of MINI BANKS, which are to encourage savings, and give short-term credits.

Earlier it used to be only agricultural loans, but now loans of other types are also given. At present, most of the societies have only been confined to Service Societies or act as another government body to advance loans. The problems as seen are:

§ Now most of these credit cum-service societies face a problem of non-recovery of loans, resulting in lesser and lesser number of people getting the loans, as less capital is available for circulation.

§ Elections became a formality to meet a few conditions, required by the government. This takes into confidence a few influential people in the village, alienating rest of the members from its functioning.

The objective and direction with which these institutions started, has been lost somewhere in the above process of change. The idea of having a reserve to meet the need of grains and seeds during shortage, have an institution controlled and maintained by the people themselves within the village has been transformed into an attitude of dependency on an institution which is moving further from them in terms of objective, functioning and approachability.

Despite the plethora of intervention systems, we see seeds of the old traditions germinating. Small institutions reappearing, confined to a small group of people, may be at hamlet or a village level, exclusively controlled and maintained by themselves. They are proud of it. For these institutions they do not look for outside help, as outside help has a connotation of interference i.e. negative. Such small scale grain banks are now being formed in many of the villages with the same old principles but far more determined to serve its purpose.

Reproduced from Livelihoods, May 2008