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LATEST NEWS UPDATES | Maharashtra: Can pledge loan scheme help tide over 'tur' crisis? -Abhiram Ghadyalpatil

Maharashtra: Can pledge loan scheme help tide over 'tur' crisis? -Abhiram Ghadyalpatil

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published Published on May 23, 2017   modified Modified on May 23, 2017
-Livemint.com

Experts say a government-sponsored pledge loan scheme could still help Maharashtra tide over the tur crisis and provide relief to farmers

Could Maharashtra government and the Centre have mitigated Maharashtra’s tur (pigeon pea) crisis by facilitating and encouraging pledge loans? Yes, say farm sector experts, bankers, warehouse industry officials and former government officials.

Pledge loans are loans secured by farmers from banks against their farm produce deposited at a warehouse.

Timely government intervention to facilitate pledge loans could have checked the tur crisis early as the government found itself unable to procure the record output of 2.35 million tonnes at the promised price of Rs5,050 a quintal, experts said. They said a government-sponsored pledge loan scheme could still help it tide over the crisis and provide relief to farmers.

India is the world’s largest producer, consumer, and importer of pulses including tur and Maharashtra is India’s largest tur-growing state. According to the second advance estimates of the Union agriculture ministry, India produced a record 4.23 million tonnes this season, against 2.56 million tonnes in 2015-16. So far, the government agencies have purchased only 1.35 million tonnes at the minimum supported price (MSP), of which Maharashtra accounts for the largest share of 600,000 tonnes. Farmers, frustrated by government’s failure to buy at MSP on a large scale, have sold off their tur produce to traders at Rs4,100-4,200 per quintal in Maharashtra. Experts and tur market stakeholders say this could have been prevented.

According to an official at the National Bulk Handling Corporation (NBHC), a leading provider of services like commodity and collateral management and which has more than 2,000 warehouses in 23 states with a total capacity of 34.7 million tonnes of farm commodities, banks have extended around Rs50,000 crore of pledge loans to farmers. He said NBHC managed farm commodities as collateral for 55 leading banks and the government should have intervened to promote pledge loans.

Farmers can take pledge loans in two ways. One, they deposit their produce with a warehouse accredited by the Warehouse Development and Regulatory Authority (WDRA). The warehouse issues a receipt to the farmers. The farmers take the receipt, which mentions details about the quantity and quality of the produce deposited, to a lending institution which offers them credit of 70-85% of the total cost of the produce based on its current market price. In the second option, the farmer can identify a buyer for his produce and get credit on a warehouse receipt—an agreement signed between the farmer and buyer as a future contract. The farmers can repay the loan on by timing the sale of their produce to market conditions.

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Livemint.com, 22 May, 2017, http://www.livemint.com/Politics/vVVTs3yDUX73ycbeIcR68J/Maharashtra-Can-pledge-loan-scheme-help-tide-over-tur-cri.html


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