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LATEST NEWS UPDATES | RBI panel questions efficacy of populists schemes for farmers, in favour of more structural changes -Atmadip Ray

RBI panel questions efficacy of populists schemes for farmers, in favour of more structural changes -Atmadip Ray

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published Published on Sep 15, 2019   modified Modified on Sep 15, 2019
-The Economic Times

The group is also in favour of revising the sub-target for small and marginal farmers to 10% from the existing 8% of adjusted net bank credit with a roadmap of two years.

KOLKATA:
A Reserve Bank of India working group on agricultural credit has questioned the efficacy of populist measures such as debt waiver and interest subsidy on crop loans, while suggesting a slew of structural changes to boost farm loan delivery uniformly across regions.

The internal group led by deputy governor Mahesh Kumar Jain has called for replacement of interest subvention by direct cash transfer with an overall limit of Rs 3 lakh per farmer, and suggested setting up of a credit guarantee fund to encourage banks to step up lending.

The group is also in favour of revising the sub-target for small and marginal farmers to 10% from the existing 8% of adjusted net bank credit with a roadmap of two years.

“The sector still faces challenges such as lack of capital formation, regional disparity, dependence of farmers on non-institutional sources of credit at significantly higher rates, non-realization of the fair price for agricultural produce causing farmers’ distress and farm loan waivers impacting credit culture and weakening state finances,” Jain said.

The credit guarantee fund can be set up by the government on the lines of credit guarantee schemes implemented in the MSME sector, the report said.

“Government of India and state governments should undertake a holistic review of the agricultural policies and their implementation, as well as evaluate the effectiveness of current subsidy policies with regard to agri inputs and credit in a manner which will improve the overall viability of agriculture in a sustainable manner. In view of the above stated, loan waivers should be avoided,” the committee said in its report which was made public Friday.

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The Economic Times, 13 September, 2019, https://economictimes.indiatimes.com/news/economy/agriculture/rbi-panel-questions-efficacy-of-populists-schemes-for-farmers-in-favour-of-more-structural-changes


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