Chandigarh: Punjab Chief Minister Parkash Singh Badal on Thursday said the Centre should soon initiate structural reforms in the long-term credit segment to boost overall development of country's agriculture and rural economy. (Agencies)
"The Chief Minister said credit plays a crucial role in the private capital formation of agriculture, but unfortunately, the farm credit policy of our country is unfavourable to promote private investments in agriculture," an official statement said.
He was addressing the first national Conference of Principal Secretaries (Cooperation) jointly organised by the Punjab government and National Co-operative Agriculture & Rural Development Bank here.
He said the Central government has now contributed to bring the cost of crop loans to the moderate rate of 4 per cent after providing 3 per cent interest subvention.
But the cost of investment credit continued to be unaffordable, being as high as 13 to 14 per cent, he said.
This is compared to re-finance given by NABARD for long-term credit at the interest of 10 per cent, which was a huge disincentive for farm sector, he added.
He sought Centre's intervention to facilitate bringing down the cost of investment credit by NABARD and banks.
Badal said the interest subvention scheme of the Central government for crop loans should be extended to long term loans to address this problem, the statement said.
Traditionally, Agriculture Rural Development Banks (ARDBs) have been the main agencies for giving investment loans to farmers.
But, he said, these institutions were not getting adequate support from the central government in terms of revival and lending packages.
Earlier a two-year moratorium was provided by NABARD allowing better cash flow and credit to the ARDBs.
Badal suggested the governments and NABARD/RBI should come up with the innovative schemes to enable the ARDBs to raise resources and income like ancillary banking services to increase their profitability.
He urged the NABARD to review its decision in the larger interest of farming community and also in view of the fact that NABARD was completely insulated through state government guarantees against any risk in financing ARDBs.
The Chief Minister asked the Central government to implement the recommendations of Vaidyanathan Task Force to revive the long term credit structure without any further delay.
He hoped the conference would go a long way in highlighting and addressing all issues of concern to provide farm loans at affordable rates.
Speaking on the occasion, MLA from Kerala and Chairman NCRDB Federation, K Sivadasan Nair appealed to the Chief Minister for taking up the issue of revival package of long term structure involving recapitalization and reforms as recommended by the Vaidyanathan Task Force with the Central government forthwith.
Chandigarh: Punjab Chief Minister Parkash Singh Badal on Thursday said the Centre should soon initiate structural reforms in the long-term credit segment to boost overall development of country's agriculture and rural economy.