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Moderated conference on rural advisory services for family farms: 1-18 December 2014

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Mon, 8 Dec 2014 10:57:58 +0100
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I am S.S. Roy, doctorate in agriculture, presently associated with the BAIF Development Research Foundation, a Pune based national level NGO engaged in livelihood development activities in the country, after serving for 35 years in the field of agriculture and rural banking sector in India in various capacities in commercial bank and the National Bank for Agriculture and Rural Development (NABARD).

The much needed advisory service to the family farm may broadly covers three areas viz. technical, financial and organisational. The technical advice, being the most important, may encompass pre-production, production and post-production areas. The financial advisory may include arrangement for credit/finance and its judicious utilisation, marketing of the produce at competitive prices and maximising the revenue to the farmers. Lastly, the organisational aspect that focuses on community mobilisation to leverage the market and also access to many other tangible and intangible facilities available in the village.

As is well known, credit is a critical component for agricultural production. Easy accessibility and the cost of credit are very important for the farmers, especially for small and marginal farmers. Though a number of pro-farmer initiatives have been taken by the Government of India during the past four decades, there is still a gap persisting in realising the desired objectives of easy access to low cost institutional credit. The first initiative was taken by the Government of India by stipulating a credit  target of 18%  towards the agriculture sector by the commercial banks after nationalisation in 1969. To cater for the requirements of small farmers and micro-entrepreneurs in the rural areas, a specialised bank known as the Regional Rural Bank (RRB) was formed as a subsidiary of the existing commercial banks in 1976. To give more focus and comprehensive support to various financial institutions for augmenting the rural credit, a new organisation known as the National Bank for Agriculture and Rural Development (NABARD) was created in 1982 at the national level by subsuming some responsibility of policy planning and regulatory role of the Reserve Bank of India (RBI).

There is no denying the fact with these initiatives and many more similar initiatives like formation of self-help groups (SHGs) and micro credit institutions, various credit linked subsidy schemes, in the later years have resulted in a phenomenal growth in agricultural credit in India (from 368 billion rupees in 1998-1999, to 6073 billion in 2012-13). The fact remains that small and marginal family farmers have not been able to get the benefit commensurate with its proportion to total numbers. One of the major impediments of low credit intake for this section of the farmers was non-availability of any comprehensive advisory service.

Banking institutions (Commercial Bank, RRB, NABARD) earlier used to provide the comprehensive advisory service (both technical and financial) to the farmers through their own technical officers/staff, specially recruited for this purpose. These officers/staff, with agriculture or animal husbandry degrees, used to provide the requisite technical inputs related to the production of crops and livestock and simultaneously provide guidance regarding credit and financial prudence to farmers, especially to the small and marginal farmer who needed it most. However, the erstwhile advisory service by the banks (also then used to be known as social banking), has taken the back seat and is now dominated by pure profitability index which has led to dispensing this important service.

It is time to revisit this approach by the banking industry so that the interest of the farmers, especially the small and marginal farmers, and also the problem of non-performing assets (NPA) of the banks are addressed through quality lending.
 
Dr S.S. Roy
Flat B-17
Trinity Court
South Main  Road
Lane 5, 
Pune - 411001 
India
(M) 91 9049455426
e-mail: ssr47 (at) hotmail.com

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