Mainstream Weekly

Home > Archives (2006 on) > 2016 > Unequal exchange system — a variant of bonded labour system

Mainstream, VOL LIV No 13, New Delhi, March 19, 2016

Unequal exchange system — a variant of bonded labour system

Challenge to Human Rights based on Respect for Human Dignity, Freedom, Social Justice

Sunday 20 March 2016, by Lakshmidhar Mishra

Article 19 (g) of the Constitution of India confers on every citizen of India the fundamental right to practise any profession or to carry on any occupation, trade or business. By implication, it would include the right to appropriate or purchase and/or sell products, according to one’s own volition and convenience, at a rate which is considered just, fair and equitable without any element of deceit and guard, manipulation, coercion or regimentation. To the extent such transaction carried out with openness and transparency contributes to a decent livelihood, which is an integral part of the right to life as guaranteed by Article 21 of the Indian Constitution, this becomes a socially desirable activity.

The Bonded Labour System (Abolition) Act was passed by both Houses of Parliament on February 9, 1976 but was made enforceable retrospectively with efffect from October 25, 1975, the day the BLS (Abolition) Ordinance had been promulgated by the Hon’ble President of India. The Bonded Labour System is basically an unequal exchange system obtaining between a creditor and a debtor. A debtor, who is poor, landless, assetless and resourceless, approaches a creditor, who is rich, resourceful, having command over natural resources and influential, for a loan/debt/advance for ceremonial, consumption and development needs. As usual, a price tag will be attached to such loan/debt/advance by every creditor. The debtor pledges his services or services of any of his family members for a specified or unspecified period as the collateral for such loan/advance. As S.2 (g) of the BLS (A) Act reads, four consequences would flow from such unequal exchange relationship which, succinctly stated, are:

* denial of statutorily notified minimum wages or payment of nominal wages (where no such minimum wage has been fixed) for services rendered by the debtor or any such member of his family to the creditor for a specified or unspecified period;


* denial of the freedom of employment, that is, freedom to change the employer to go in for an alternative employer and avenue of employment;


* denial of the freedom to move from one part of the territory of India to another (as guaranteed under Article 19 of the Constitution);


* denial of the right to appropriate or sell at market value any property or product of labour (either of the debtor or that of a member of his family or that of any dependent person).

The above four consequences are alternatives and not conjunctives. In other words, any one of the four consequences together with an element of loan/advance is sufficient to establish the incidence of the bonded labour system.

Unequal exchange system would imply that when either labour or a product of labour is being exchanged between two persons, it must, regardless of their rank or social/economic status, birth or social origin, be on equal terms and must fetch a value or price which, according to the prevailing market conditions, is just, fair and equitable.

It would also mean that the terms of trade between the two are not encumbered by any preconditions or such conditions which prima facie would be illogical, irrational and immoral.

By way of illustration, I would like to explain this concept by giving three examples.

The First

• A grower of paddy takes loan/advance from the owner of a rice mill to buy seed, fertiliser and pesticide to grow paddy.

• Paddy has a minimum support price fixed by the government ranging between Rs 1000 and Rs 1500 per quintal.

• The rice mill owner, instead of agreeing to pay the minimum support price as fixed by the government for buying paddy from the grower will insist that the latter should sell the paddy so grown by him on his land or on the land of any other land owner to his rice mill at a rate much lower than the minimum support price.

• The paddy grower will have little or no option but to sell paddy to the rice mill owner at a discounted price as he has taken loan/advance from the latter and is helplessly dependent on him.

The Second

• The second example relates to fishermen.

• They also take loan/advance from a creditor for purchase of boat, net, fishing rod etc. before going in for riparian or marine fishing.

• As they return after catching fish, they are forced to sell the catch to the creditor at a price which is much lower than the market price.

• Fish being a perishable commodity, fishermen cannot hold on to the stock for a long time in the absence of a deep frieze plant or cold storage run by a cooperative society of which they are members.

• This together with the fact that they are helplessly dependent on the creditor for financial support for their survival in the occupation leaves them with little or no option except to part with their produce on unequal terms in favour of the creditor.

The Third

• Tribal collectors of minor agricultural and forest produce go to forests alone or with family members in the early hours of the morning to collect a host of items such as:

- various roots/ tubers;

- ginger;

- niger seed;

- rajma;

- gum karaya;

- nux vomica;

- sal seed;

- tendu leaf;

- resin;

- lac;

- turmeric;

- tamarind;

- mohua flowers.

• Collection of such produce in thick forests is fraught with occupational risk and hazards such as snake bite, insect bite and being exposed to attacks from deadly forest animals.

• As they return home, malfunctional and dysfunctional middlemen would approach them, rather clandestinely or surreptitiously, pay some nominal amount (which is much lower than the price which these products would fetch in the market) and mop up the entire produce.

• These poor collectors of minor agricultural and forest produce lack the economic wherewithal to process the products, lack storage space to store them and, therefore, are left with no alternative except to part with the products in favour of middlemen at a terribly low or unremunerative price.

The illustrations given above are not figments of my imagination but true life stories. Very recently a large number of fisher women, men and children in Mehaboobnagar district in Andhra Pradesh who were found to be working under a contractor under similar conditions of unequal exchange have been rescued by the International Justice Mission, an international NGO which has several such creditable rescue efforts to its credit.

As far as the third illustration is concerned, following the recommendations of the K.S. Bawa Committee report in the early 1970s, large agricultural multi-purpose societies (LAMPs), Tribal Development Cooperative Societies (TDCSs) and Girijan Corporations have come up in different parts of the county to protect and safeguard the interests of tribal collectors of minor agricultural and forest produce but they have been sliding lower and lower on the scale of development and their plight and predicament are worse than before as the chain of middlemen who are responsible for their expropriation and exploitation could not be replaced/eliminated and they continue to operate as freely and effectively as ever.

Regretfully, this very salutary provision of the law has not been made use of by the official agencies to rescue/release and rehabilitate the victims of the unequal exchange system. Since the victims continue to be unorganised, lack necessary bargaining and countervailing power, they have not been able to seek judicial redress either by way of filing a WP under Article 226 / 227 or Article 32 of the Constitution or by any other means of seeking legal remedies.

The only way by which we can put an end to the culture of silence, helpless dependence and unequal exchange is to mobilise and organise the victims into cooperative societies, ensure provision of seed and working capital to the members so that they can grow under conditions of freedom, sell the produce at a remunerative market price and be able to lead a decent, dignified and autonomous existence.

As the experiment launched by Ms. Sheila Rani Chunkath (IAS 1978 RR Tamilnadu Cadre), ex-Collector, Pudukottai, has shown, social action programmes like mass campaigns for total literacy woven around economic activities (brick making, quarrying, gem cutting and polishing) through the protective and anti-exploitative structure of cooperative societies, can make workers, hitherto helpless victims of an unequal exchange system, equal partners in an enterprise, eliminate middlemen from outside and ensure that just, fair, and equitable price of labour and price for the product of labour would accrue to the victims, liberated from bondage and would ensure for them their irreducible barest minimum.

To conclude, if the unequal exchange system which is a variant of the bonded labour system is to be eliminated and replaced by a new social order which is just, fair and egalitarian, we have to remember the efficacy of one single maxim, ‘Those who cause pain to others do not know what that pain is; those who make others cry or moved to tears do not know how to wipe out those tears.’

Remembering this maxim can make us more humane, empathetic and sensitive and that by itself will provide sufficient countervailing power to remove this age-old blot on society.

Selected References

Mishra, Lakshmidhar (2011) , Human bondage—tracing its roots in India, Sage Publications, New Delhi.

Mishra, Lakshmidhar (1994), Anguish of the Deprived, Oxford University Press, New Delhi.

Athreya, Venkatesh B. and Sheela Rani Chunkath (1996), Literacy and Empowerment, Sage Publications, New Delhi.

Dr Lakshmidhar Mishra, IAS (Retired), is a former Union Labour Secretary. He can be contacted at e-mail:

Notice: Mainstream Weekly appears online only.