Victims of a practice worse than usury

Residents who have pledged their ration cards for loans purchase their entitlements from money lenders

Twenty-three-year old Ramesh * borrowed money for the first time when his brother was down with jaundice for his treatment. A local moneylender had lent him Rs.3,500 against his family card. Today, the debt has multiplied to Rs.13,000. He is nowhere close to reclaiming his ration card.

Mariappan had borrowed Rs.10,000 against his ration card to fund his component of the Indira Awaaz Yojana housing unit. But, when he ended up paying manifold for monthly rations, he re-borrowed from other sources and reclaimed his ration card.

In the Arunthathiyar colony of Thakkatty Panchayat in Thally block, over 15 households had pledged their family cards to Bairamma, the local money lender, a woman, for loans for various emergencies. More often than not, the cycle of debt is triggered by a health crisis in the family.

At first, it is the necessity to wade through an immediate debt, says Kumar, a colony resident. Then the cycle of distress and multiplying debt catches up, leaving them without ration supplies for prolonged periods.

Every month, the family collects its monthly ration supplies and hands them over to the money lender along with the card. The family that borrowed a paltry sum of Rs.3,500 to meet a health crisis is forced to purchase their ration goods from the money lender at four times the price.

Sought-after collateral

There is a method to this extractive practice. A ration card can fetch a loan of up to Rs.5,000. Irrespective of the loan amount, the family card is the most sought-after collateral. The borrower ends up paying an interest in kind through the monthly ration entitlement worth Rs.152 (excluding the free rice of 20 kgs/35 kgs).

But the resale of the same rations to the borrower in distress is extractive by all means: the 2 kg of sugar sold at Rs.13.50 per kg through PDS is resold at Rs.40 per kg; 20 kg (35 kg for BPL) of free rice is sold at Rs.10 per kg; 2 kg of pulses subsidised at Rs.35 per kg is resold at Rs.70 per kg; 1 litre of palm oil of Rs.30 is resold at Rs.60 to Rs. 70 per litre and 2 litres of kerosene sold at Rs.13.50 per litre is resold at Rs.50.

The forfeiture of rations is singeing when the poor borrower repurchases her entitlement from the same moneylender. Once the card is pledged, the card owner has little choice but to repurchase the ration goods at Rs.580 (Rs.730 for poorest BPL green card holder with 35 kg rice entitlement). Where the loan exceeds Rs.5,000, a 5 per cent interest is charged, says Kumar.

Pledging of ration cards, forfeiture of rations and repurchase of the same rations at extractive costs are also seen in the neighbouring panchayats. At the predominantly Adi Dravidar Mavanatty village and Devanthotty village of Anjetty Panchayat – the same practice is followed. Here, money is lent by a local running a small eatery. After the resale of rations to borrowers, the rations are diverted to the money-lender’s eatery, says a Devanthotty man, requesting anonymity.

Wherever the ration shop supervisor refuses to dole out the supplies to the non-card holder, the borrower is required to collect the supplies and turn them over to the money lender along with the card, says Ramesh, who had just last week re-surrendered his card after taking it back to link it with the Aadhaar Smart card.

(* All names changed)

Once the card is pledged, the owner has little choice but to repurchase ration goods at a high price