Rural Bengal in Grip of Severe Debt Trap!

In a shocking incident that underscores the depths of economic hardship in rural Bengal, a man was allegedly forced to hand over one of his wife’s kidneys to a moneylender after failing to repay the principal amount of a loan. The incident took place in the Ashoknagar area of North 24 Parganas district, approximately 46 kilometers from Kolkata.

The victim, Rajib Das (29), a resident of Haripur under Ashoknagar police station, works as a cleaner with a catering agency. Facing acute financial distress, he had borrowed ₹60,000 last year from Bikash Ghose, a local moneylender residing in Bhairabtala. The loan was taken on a daily interest basis at an exorbitant rate of 10% per day.

"Under severe financial crisis, I borrowed ₹60,000 at a daily interest of 10%, and had to pay ₹600 per day for the last seven months. In this way, I ended up paying nearly ₹1.3 lakh in interest alone. But due to my meagre income, I could not repay the principal amount," Rajib Das told reporters on March 22.

Under mounting pressure from the moneylender, who allegedly suggested that the couple sell their kidneys to settle the debt, Das said he agreed to sell one kidney of his wife. The kidney was removed on March 14 at a private hospital in South Kolkata. The recipient, a man from Uttar Pradesh, had reportedly promised to pay ₹5 lakh upon the discharge of Das's wife from the hospital.

A cold storage labourer are waiting to carry potatoes bags at Sankarhati village Bankura

However, following the procedure, the moneylender allegedly demanded an additional ₹1.6 lakh over and above the principal amount of ₹60,000, bringing the total demand to ₹2.2 lakh. When Das refused to pay the extra amount, he was allegedly threatened by the moneylender.

Fearing for his safety, Das lodged a complaint with the Ashoknagar police station. Acting on the complaint, the police arrested the moneylender and one of his associates. Police officials suspect that Ghose is involved in a larger kidney trafficking racket and are currently investigating how many others may have been coerced into selling their kidneys under similar circumstances.

This incident reflects the grim reality of the deteriorating financial conditions and livelihood crisis in Bengal. It highlights how vulnerable citizens, burdened by poverty and lack of institutional credit support, are falling prey to unscrupulous moneylenders and trafficking syndicates.

The gravity of the situation echoed in a recent joint meeting between banks and government officials, where such cases of economic distress and financial exploitation were reportedly discussed.

Bankers’ Report Flags Alarming Financial Distress in Rural Bengal

Information regarding the deteriorating economic conditions of rural Bengal has come to light through the State Level Bankers’ Committee (SLBC). The SLBC conducts quarterly review meetings to assess banking transactions and financial conditions across the state. These meetings are attended by state government ministers, bureaucrats, and senior officials from various banks, representatives from the National Bank for Agriculture and Rural Development (NABARD), and the Reserve Bank of India (RBI). The committee's findings are submitted to the state government for further action.

As per the latest SLBC report, as of now, 4,350 bank branches are operating in rural Bengal, out of which 2,148 are branches of nationalised banks.

The recent report paints a grim picture of the rural economy. It states that the majority of rural residents are living in severe financial distress. Between March 31 and December 31, 2024, rural customers deposited a total of ₹17,576 crore and ₹21 lakh in various rural bank branches. Bengal’s rural population is approximately seven crore. This means that, on average, an individual deposited ₹2,510 over nine months — roughly ₹279 per month — indicating extremely low saving capacity.

During the same period, banks disbursed loans worth only ₹133 crore and ₹46 lakh in rural areas. This translates to an average loan amount of merely ₹19 per person, further reflecting the lack of financial inclusion.

A senior bank official, requesting anonymity, said, “Most of the loans sanctioned are availed by affluent, salaried individuals, or those with income-tax clearance certificates. A large number of poor and marginalised people neither have stable employment in their local areas nor access to institutional credit. Although many of them possess bank accounts, these accounts remain inactive as they do not believe they can avail of loans.”

The report also mentions that banks often reject local business loan applications in rural, urban, and semi-urban areas citing non-profitability. Banks fear such loans may turn into non-performing assets (NPAs).

Subhash Dutta, Marketing Manager of a lead bank in Bankura, said, “Banks are reluctant to sanction small business loans because they may become bad loans. Depositors' interest rates are also decreasing, which has made banks less attractive to people. Many are now investing in the stock market instead of depositing money in banks.”

He further pointed out that the loan application process in nationalised banks is lengthy and complicated. Moreover, there is a severe shortage of staff in these banks. Currently, the employee-to-customer ratio stands at 1:3,500, compared with 1:700 a decade ago.

On the other hand, private banks offer quicker service, maintaining a ratio of one employee per 350 customers. This is why borrowers, particularly those seeking loans to expand businesses like real estate, prefer private banks despite higher interest rates.

Several employees of nationalised banks blamed the Central government for gradually reducing the importance of public sector banks by merging multiple banks and limiting their autonomy. They also alleged that while corporate defaulters, who took massive loans from nationalised banks, face no strict action, small traders and farmers encounter multiple hurdles while trying to avail loans. This systemic disparity exists across the country, including in West Bengal, said Gangadhar Sarkar, leader of the Bank Employees’ Federation of India (BEFI) in West Bengal.

Additionally, the report highlights concerns related to the West Bengal Student Credit Card Scheme, launched on June 30, 2021, by Chief Minister Mamata Banerjee. The scheme allows students to borrow up to ₹10 lakh for higher education at a simple interest rate of 4%. However, many banks have reportedly been reluctant to process these loans. Several students from Bankura and Purulia districts complained that they did not receive loans despite applying.

Furthermore, though the scheme promises a 4% interest rate, many students claim they were charged 10% interest. A district-level administrative officer in Bankura said the administration was trying to resolve the issue in coordination with bank authorities. Bank officials, however, stated that while the state government subsidises 6% of the interest, the subsidy often arrives late, causing confusion and discrepancies in the interest rates charged.

Job Opportunities, and Dismal Condition of Local Traders

One of the largest employment opportunities for unskilled workers in rural Bengal was provided under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Approximately 3.4 crore rural residents of Bengal hold job cards under this constitutional right scheme. However, no work has been provided to them over the past three years. The Central government stopped releasing funds for the scheme on March 9, 2022, citing alleged corruption in its implementation.

At a time when Chief Minister Banerjee is on an official visit to London, Bengal’s Panchayat and Rural Development Minister, Pradip Majumdar, remarked, “We have not received any MGNREGA allocation. I cannot predict whether the state will be able to implement the scheme next year; I am not an astrologer.”

Former sabhadhipatis of Bankura and Paschim Medinipur, Partha Protim Majumdar and Pulin Bihari Baske, pointed out that under this scheme, thousands of crores of rupees in wages were previously earned, leading to the creation of developmental assets, such as reservoirs, ponds, roads, and afforestation projects. The scheme also boosted local markets and ensured continuous financial transactions of the rural poor with banks. However, they noted that all of this has now come to a halt.

Sagar Badyakar, assistant secretary of the Khetmajur Union of West Bengal, questioned why, despite allegations of corruption in the implementation of MGNREGA, the Central government had failed to take action against the offenders. He alleged that the scheme was largely monitored by local Trinamool Congress (TMC) activists, who acted as supervisors. He said millions of rural labourers had become victims due to the suspension of the scheme and questioned why no legal steps by the state government were taken to protect the constitutional rights of these labourers.

In response to the stoppage of MGNREGA, the Chief Minister announced the launch of a new state-level employment scheme named ‘‘Karmashree’’, guaranteeing 50 days of work per financial year to rural residents. However, several panchayat officials said that over the past two years, the Karmashree project had not been funded by the state government. Instead, it has been implemented using funds allotted by the 15th Finance Commission, which are provided by the Centre.

Moreover, routine administrative and maintenance work in rural areas has been labelled under the Karmashree scheme. Despite claims that Karmashree is a state-owned initiative, no specific budget allocation has been made for it in the upcoming financial year, they said.

Unorganised Sector Wages and the Rural Economy

Over the past 13 years, wages of unorganised sector workers in West Bengal have not seen any significant increase. Nearly two crore workers are employed in sectors, such as construction, brick kilns, stone mining and crushing, rice and oil processing mills, and bidi manufacturing. Although a Minimum Wage Advisory Committee exists under the Labour Department, the wages remain stagnant. Following continuous protests by CITU (Centre of Indian Trade Unions) demanding a wage hike, the Labour Department decided four years ago to increase wages by 10%. However, no such hike has been implemented to date.

Kinkar Posak, a senior CITU leader in West Bengal, stated, “If the wages of this large section of workers do not increase, the social and economic impact will be relentless. That is already happening.”

Wage stagnation has had a cascading effect on the rural economy. In several rural areas, small businesses such as grocery stores, footwear shops, garment stores, and hardware shops have shut down.

Nimai Mondal, a grocery shop owner from Bhagabanpur village in Chhatna Block, Bankura, said, “Daily wage workers used to buy essential items from our shops. But with their incomes declining, they are unable to purchase even basic goods. Our sales dropped drastically, forcing many of us to close our shops. Now, we are struggling to run our families.” Similar concerns were expressed by Kalyan Mahato, a garment shop owner, and Brindaban Sardar, a vegetable vendor from Manbazar, Purulia district.

The Agricultural Scenario

The crisis extends to the agricultural sector as well. Farmers describe their relationship with banks as ‘lifelines’. However, this relationship has weakened over the years. “During the Left Front regime (1977-2011), we used to get seasonal loans from cooperative and nationalised banks for cultivation. Now, cooperative banks have almost stopped lending, and nationalised banks only provide loans for tractors or harvesting machines, which are availed by traders, not farmers. We are forced to borrow from middlemen and microfinance companies at exorbitant interest rates,” farmers Samir Bhandary and Sumanto Bag from Raybaghini village, Kotulpur Block, Bankura, told this writer.

They said they were unable to secure minimum support prices for their produce. After harvest, they were compelled to sell paddy to middlemen and repay loans to microfinance companies charging interest rates as high as 20%, they added.

Bengal has witnessed record potato production this year, with an estimated yield of 1.4 crore tonnes. However, farmers are unable to fetch even minimum expected prices. Dibakar Ghose from Joypur, Bankura, and Madhab Hazra from Memari, Purba Bardhaman, reported that the cost of cultivating potatoes was around ₹33,000 per bigha, yielding 40-45 quintals per bigha. The current market price is only ₹720 per quintal, resulting in a loss of ₹10,000–12,000 per bigha.

On February 25, Chief Minister Banerjee announced that the government would procure 11 lakh tonnes of potatoes from farmers across 12 districts at a minimum support price of ₹900 per quintal. Each farmer would be allowed to sell up to 35 quintals between March 1 and March 31. Debkumar Sarkar, Deputy Director of Agriculture, Bankura, said the procurement centres and cold storage facilities were set up under the supervision of agriculture department officials.

However, ground reports suggest that the initiative was short-lived. Initially, potatoes were procured under the Sufal Bangla scheme, but the process was soon halted. Observers noted that the actual quantity procured can be verified only by checking the records of the 496 cold storage facilities across the state, as the government instructed procurement from these storages.

When asked to comment on the broader economic situation, Professor Pratip Mukherjee, former Head of the Economics Department at Bankura Sammilani College, Professor Subikash Choudhury for head of the Economics department of Bankura Christian College and Tusar Hazra, a former officer of Bangiya Gramin Bank, told this writer, “The government lacks a clear policy to strengthen the state's rural economy. Employment and stable income are crucial to sustaining the local market. The banking system should support rural economic activity, but the state government has failed to build a strong structure. As a result, the suffering of common people is increasing.”

When asked to comment, Aloke Mukherjee, TMC leader and MLA of Barjora, Bankura, along with Bikram Chatterjee, TMC president in Bishnupur parliamentary constituency, said farmers were receiving financial assistance under schemes like Krishak Bandhu and women were benefiting from the Lakshmir Bhandar scheme. They also claimed that the state government was making efforts to create new employment opportunities.

The writer covers the Jangalmahal region for ‘Ganashakti’ newspaper in West Bengal. The views are personal.

(All pictures by Madhu Sudan Chatterjee)