Union home minister Amit Shah, who is also the minister for cooperation, on Friday advocated for expanding the network of primary agriculture credit societies (PACS) to every panchayat with an aim to increase agri-finance to Rs 10 lakh crore annually through cooperatives.
“Our aim should be disbursal of Rs 10 lakh crore agricultural credit through PACS. However, since ’92 till ’22, there has been a decline in agricultural credit through PACS. This is a matter of concern for all of us that agriculture finance through cooperatives is coming down” he said at a conference of the National Rural Cooperative Banks in the national capital.
With approximately 13 crore members and 75,000 of the 95,000 PACS that are functioning well, these disburse agricultural credit to farmers worth approximately Rs 2 lakh crore. Noting that there are nearly three lakh panchayats in the country, Shah pointed out that two lakh of them do not have any trace of PACS. The aim of the Narendra Modi government, he reiterated, was to take the number of PACS to three lakh from the current 95,000 and credit disbursal from Rs 2 lakh crore to Rs 10 lakh crore.
To make this happen, the ministry for cooperation, which was carved out from the agriculture ministry by Prime Minister Narendra Modi in July last year, has already published model bylaws on its website and asked for suggestions from all stakeholders, crucially the states, since agriculture is a state subject, district, and state rural banks among others. Shah called upon all the chairpersons of the rural banks present at the conclave to brainstorm these bylaws and write to the ministry with their suggestions since the government aims to finalise the new model bylaws in another fifteen days.
Underscoring the importance of primary agriculture credit societies, Shah said these have a “humane”, not “ruthless”, approach towards financing farmers. The country’s farmer needs a humane approach to accessing credit which only PACS can achieve, he said. “PACS are the soul of our agricultural credit system. As long as PACS don’t function well, the system of financing agricultural credit will always fall short,” Shah emphasised.
In a move that could change the face of agricultural financing at the grassroots, Shah disclosed that it is being proposed that rural cooperative banks can also finance medium-term and long-term loans through PACS. Currently, long-term and medium-term loans are financed directly and only short-term loans are financed through PACS. “If this is done through PACS, then the farmer does not have to mortgage his land. The PACS will have the farmer’s documents; our effort is to link the 3,00,000 PACS to district, state rural banks, under NABARD’s umbrella supervision,” the minister said.
However, just adding numbers to the existing PACS would not be enough without making them viable and for that deep reforms are necessary, he said. “The first task of district cooperative banks is to prepare a five-year blueprint for PACS in every panchayat. State cooperative banks should monitor the viability of that blueprint and NABARD, through its various departments, endorse the same. The Government of India will extend support to these through its various programmes,” the cooperation minister said, adding, “And therefore, the first decision that the government has taken is to computerise PACS and bring district and state cooperative banks on one common software.”
The government believes that computerisation would automatically ensure upgradation of human resources, financial prudence, and better auditing of PACS. “Computerisation is the medicine to a hundred ills and that will be successful if only the heads of district cooperative banks take it to the grassroots. Many have actually ended computerisation. It is needed to have the country’s agricultural credit system on one common software,” underlined Shah. The government has set aside Rs 2,500 crore for computerisation.
Secondly, Shah said that professionalism must be inculcated in those who manage the PACS. Stressing on the need to make PACS viable, the cooperation minister said that post the new bylaws, PACS will not be restricted to financing agricultural activities alone. When three lakh PACS are formed, these have to be made viable, he said. Twenty-two new economic activities that have been allowed in the proposed new model bylaws for PACS include distribution of gas, distribution of water, PCOs, FPOs, and storage of agricultural produce.
Looking back at the history of the 120-year-old cooperative movement, Shah said that there have been many achievements but there have also been many losses and that necessitates “introspection”. “I believe, this is the best opportunity for the cooperatives movement when Modiji is the Prime Minister, because Modi ji has a vision that it is only through the cooperatives that the financial sector can reach the last man in the society, through which the economy of the country and the last individual develop,” he said, underscoring the urgency of the project.
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