Dr BK Mukhopadhyay
A noted management economist and an international commentator on business and economic affairs. He may be reached at firstname.lastname@example.org
Is it not a fact that in economies like India the gains from green revolution has been slowly fading away? Judging by the ongoing facts and circumstances, population growth is not going to retard, especially in the developing block, while foodgrains output would not be able to register commensurate growth.
Pepping up Farm Credit Flow
There is no doubt that lending is still skewed in favour of a few industrial houses. Naturally the clarion call is there to increase the lending speed to the farm sector. Banks are to focus on the bottom of the pyramid by giving loans to tenant-farmers, small and medium enterprises, and extending micro-credits in villages. It has rightly been observed that for the PSBs, private banks, foreign banks, RRBs and co-operatives farm lending would be the key areas in the days to come.
Truly, institutional finance alone could not change the scenario in the very absence of other infrastructure and allied supports. Simply asking the banks to double credit flow/utilization in next three years is not enough. The roots must be taken into account.
In fact, agriculture sector does not require money flow alone – more important is to have the infrastructure development at the earliest. Dependence on rain god adds to the woes. And then floods and droughts becoming a annual ritual. Productivity gets a blow in the absence of quality seeds and other inputs supplies, a slow modernization process.
Coordination in Paper Only?
That is why the crucial requirement is there to beef up coordination among different sections involved in the process of farm sector’s development. There is no short-cut formula on this score and it is to be especially seen by all concerned that repayment culture is not distorted. Recycling of farm still poses the biggest menace. Huge provision for loan waiver cannot and should not be the escape route though politically attractive. Assets generation over space and time is badly required at this juncture. Practical support to the farmers stay at the top if ultimately a changed picture is aimed at, especially when potentiality galore.
Of course it is better to have a basket full of technologies. For that matter appropriate and effective delivery system to transfer technology to the rural artisans, potters, weavers, blacksmiths and so on could go a long way to make them keep heads above competitive environment. Raising agricultural productivity through technology transfer could likewise act as a booster to the region suffering from low productivity. It also remains the fact that in countries like India, 72 per cent of population still stay in rural areas and even one per cent shift in population would involve 10 million. Value addition through food processing, fisheries’ improvement, quality break-through for arts and crafts and standardization in medicinal herbs etc have the potentiality to create jobs. A network of rural industries backed by modern industry experts and networking of rural development agencies capable of such transfer of technology could yield better results even within the traditional scenario.
Recent studies also clearly indicate adverse impact of climate change on agriculture. Crop improvement and research to develop drought-floods-resistant high-yielding varieties of seeds assumes importance with a view to combating adverse impact of drought on food production and to ensure food security. Climate change factors would continue to play their role. Adaptation and mitigation process requires a time-bound plan, otherwise situation will further deteriorate.
Time to Change the Strategy
The need is, thus, there to formulate a credit policy especially for the small and marginal farmers. It is a fact that credit flow to the farm sector has been witnessing steady rise over time. Banks have considerable exposure to priority sector lending and more particularly in various sectors of agricultural lending. Banks, in particular, have to adopt a general strategy to accelerate agriculture advance covering the following five segments of agriculture advance:
1.Short-term production credit/working capital loan for crop production.
2.Medium-term and long-term investment credit for various activities like minor irrigation, farm mechanization, land development, horticulture and plantation, animal husbandry, agri-clinics, rural go-down, land purchase, etc.
3.Relatively large advances for commercial agriculture and allied activities, cold storages, agro processing, agri-exports, agri-inputs supplies, companies and corporations in public and private sector on agriculture-related activities, like irrigation corporation, milk plants, seed companies, etc.
4.Increased loans to weaker sections and women by way of microfinance through SHG linkage and to selected MFIs.
Banks are also to attach more importance to the following areas to augment agriculture lending:
1.Besides credit cards, other cards for meeting various needs of all categories of farmers under simplified lending procedure for faster growth in agriculture lending are to be issued.
2.Farmers indebted to informal sector are to be brought more into the fold of a specially designed product to be launched to redeem the dues of the farmers from informal source.
That is why the time is for actions so that the gaps are taken care of in a bigger and speedier way keeping in view the global trend. Especially for foodgrains, a lot depends on this part of the world. The global factor has to be essentially kept in view as many of the countries are speedily opening up and want to have a good niche in the market plus the responsibility is also there with the betters to see development taking place in Mali, or Ethiopia, Myanmar and the like.
To sum up: we need to address the challenges of the agriculture sector through comprehensive and coordinated efforts. Renewed attention needs to be paid to improving farm production and productivity, better utilization of agricultural inputs, proper marketing infrastructure and support, stepping up investment in agriculture with due emphasis on environmental concerns and efficient food management. The urgent problem that needs solution is two-dimensional — income and employment. Rising of the general income would dependent on several planks like: (i) better utilization of resources, and (ii) minimization of cost and maximization of output. The employment criteria need to be tackled through: (i) earning job through most of the year and (ii) creating jobs in allied activities like goat rearing, bullock maintenance, homehold gardening, cottage industries etc.
Regarding job creation and incomegeneration, the thing which has to receive attention is the closeliness towards traditional practices as it would be easier for the farming community to devote themselves spontaneously and continuously in activities, which they can adapt to easily.