RBI for doing away with subsidised credit for farm sector

Pune The Reserve Bank today made a case for doing away with subsidised credit for the agriculture sector, saying timely availability of funds is more important. "Pricing of credit needs to be market-based to ensure effective flow of credit to all sections of the agricultural community," RBI Deputy Governor K C Chakrabarty said at the National Seminar on Productivity in Indian Agriculture here. "Emphasis has to shift from subsidised credit to timely and adequate credit at reasonable cost especially where credit delivery system is very weak and complex," he suggested. The Government of India provides 2 per cent subsidy on the short-term crop loan. The short-term crop loan is available to farmers at 7 per cent. It is also important to carefully monitor the usage of credit right from the input to the output stage so as to ensure proper utilisation, he said, adding, monitoring of credit should not only be limited to crops but also to related activities that are funded by financial institutions like NABARD. He also suggested that the delivery of credit by co-operative sector need to be improved and NABARD should play a key role in converging credit services with other requirements that support agriculture and allied activities, including updating the farmers which help in facilitating completion of production cycles and ultimate value creation. Although, he said, schemes such as Kisan Credit Cards have helped in improving credit linkage to farmers but we need to urgently look into ways to increase the supply of agricultural credit especially to small and marginal farmers. There is a need also a need to strengthen micro-insurance, particularly for small farmers to adequately weather vagaries of nature, which affect these farmers more adversely, he said.  

ExpressIndia