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Debt bondage in India or Bandhua Mazdoori (बंधुआ मज़दूरी) was legally abolished in 1976 but it remains prevalent, with weak enforcement of the law by governments. Bonded labour involves the exploitive interlinking of credit and labour agreements that devolve into slave-like exploitation due to severe power imbalances between the lender and the borrower.

The rise of Dalit activism, government legislation starting as early as 1949, as well as ongoing work by NGOs and government offices to enforce labour laws and rehabilitate those in debt, appears to have contributed to the reduction of bonded labour in India. However, according to research papers presented by the International Labour Organization, there are still many obstacles to the eradication of bonded labour in India.

Before Independence
Before India gained independence in 1947, the caste system and hierarchy of land ownership allowed the Indian social system to mirror feudalism. Specifically, members of the high castes in India gave out loans members of the lower castes. However, these lenders forced their borrowers to repay these loans through labor. The fact that these borrowers could not purchase land allowed this practice to perpetuate across generations. In 1935, the British, who ruled India at that time, passed the Government of India Act whose purpose was to develop the Indian economy. Nevertheless, this further stratified the social hierarchy in India, contributing to the debt bondage system.

Bonded Labor System Act of 1976
In 1976, Indira Gandhi and the Indian government passed the Bonded Labor System Act of 1976 which released bonded laborers and stated that the practice of debt bondage in India was no longer allowed. However, due to poor enforcement, many workers stayed under debt bondage. According to the Ministry of Labor and Employment in India, nearly 300,000 Indians were still under debt bondage in 2009.

Forms of Debt Bondage
It is estimated by Siddharth Kara that 84 to 88% of the bonded laborers in the world are in South Asia. Out of all forms of systems in slavery in the world, the Indian debt bondage system has one of the highest numbers of forced laborers.

Agricultural Workers
Debt bondage in India is most prevalent in agricultural areas, with 80% of workers in the debt bondage system being involved in agriculture. Many farmers take out loans to be able to work on land, and landlords generate higher amounts of profit by paying these workers less than minimum wage. These farmers inevitably accumulate interest due to the need of health care and basic resources. Farmers taking small loans can find themselves paying interest on the loans that exceeds 100% of the loan per year. Additionally, many lenders only let the value of labor pay off interest and require the principal loan amount to be paid off through cash.

Children
The presence of a large number of child labourers is regarded as a serious issue in terms of economic welfare. A form of long run employer-slave relationship is formed when these children are tied to this debt bondage to work for their employers for a time period that could be stretched to a lifetime, and usually for minimal or no wages.

Contributing Factors
Author and academic Siddharth Kara believes that:- Bonded labour is a relic of history that should have long ago been eliminated from South Asia, but greed, corruption, and government ineffectiveness allow this caustic mode of exploitation to persist well into modern times. In order to ensure basic human rights, guarantee untainted global supply chains, and protect international security, the forces that promote bonded labour must be tackled immediately.

Caste System
The Indian caste system, which was widely popular in the 20th century, has 4 tiers, with Dalits making up the base of this system. Researchers such as author Sarah Knight believe that the caste system and its contribution to social stratification makes debt bondage more acceptable. Specifically, Dalits have little access to education, health care, and housing which forces them to take out loans and enter forced labor. Additionally, due to this lack of education, these individuals often don't learn about human rights or activism through communication skills.

Corruption
Researchers also cite the corruption in the Indian government and judicial system as a factor of debt bondage. Due to the millions of pending cases in the court system, many workers who entered debt bondage have issues with access to judges.

Consequences
Estimates of the problem vary. Official figures include a 1993 estimate of 251,000 bonded labourers, while the Bandhua Mukti Morcha says there are over 20 million bonded labourers. A 2003 project by Human Rights Watch has reported a major problem with bonded child labour in the silk industry.

Farmers' Suicides
From 1997 to 2012, over 180,000 farmers committed suicide in India due to the burden of debt.

National Organizations
In 1993, the Human Rights Act created the National Human Rights Commission who investigates issues of human rights violations. Additionally, the Center for Education and Communication collaborates with NGOs and is responsible for educating the world about this issue. Finally, the Academy of Development Science created a grain bank to tackle the issue of food scarcity and help Indians stay out of debt.

International Labor Organization
The International Labor Organization is responsible for dissecting labor issues and making sure exports are ethical. In 1998, India passed 39 out of the 189 conventions of the ILO, including an agreement about forced labor. Additionally, the ILO has implemented micro-finance initiatives to help Indians in debt.