Indian economy is the powerhouse for agriculture, with this sector providing gainful employment to 52% of the population and contributing to roughly 18% of the GDP. But for a specific period, the flow of capital has been restricted to this sector due to obsolete warehousing and distribution practices, lack of presence of commodity exchanges, and lack of financing options.
What is Agri finance?
Agri finance refers to different forms of financial inputs used in Agricultural sector for improving productivity, purchase of raw material inputs and funding different types of activities from warehousing, transportation to marketing
An overview of situation of Agricultural finance in India:
Indian agriculture faces a lot of hindrances with increasing population facing disguised unemployment in this sector accompanied by lack of irrigation facilities, lack of bargaining power, changing conditions, uncertain policy changes,etc . There is a lack of warehousing and storage facilities which lead to financial losses due to spoilage and pilferage. The Indian Agrifinance consist of different institutions including RBI, Cooperative banks, National Bank for Agriculture and Rural Development and unorganized lendings from local moneylenders and family members.
A major concern in India is the lack of easing credit, the process for obtaining loans from institutions is cumbersome and requires collateral. Indian farmers are small and marginal as a result avoiding the cumbersome process due to lack of awareness and collateral due to lack of assets they turn to unorganized channels borrowing from local moneylenders, who in the motive of earning profit charge very high interest rates, if the farmers are not able to pay due to bad harvest, bad monsoon, etc. They tend to borrow more to clear the previous debt. In this way, the farmers fall into what is known as the debt trap. These debts accumulate over time and transferred to other generations. This leads to poor conditions for farmers and is one of the causes of increasing suicides among farmers.
AGRICULURE FINANCING DURING COVID 19:
An agricultural credit has a substantial impact on farmers income and it helps in raising yield of crops significantly.
An economic stimulus packaged was announced by the government providing credit support to the farmers. The package provided credit support to small and marginal farmers through agricultural institutions like National Bank for Agriculture and Rural Development (NABARD) and national programs like Kisan Credit Card (KCC) facilities. Government promised to provide and additional layer of support of Rs 30,000 crore for crop credit needs of the Regional Rural Banks and Cooperative Banks. NABARD also promised to provide an overall of 90,000 crores in the form of normal refinance during the year 2020-21.
Government provided for nearly 25 lakh Kisan Credit cards with a credit limit of 25,000 providing easy access to institutional credit to farmers at minimal interest rates.
The Government of India has sanctioned about 63 lakh loans amounting up to Rs 86,600 crores in the agriculture sector. Around 3 crore farmers with agricultural credits of 4.20 lakh crore have used their loan moratorium benefits of three months. From March 2020, The government has also sanctioned a working capital limit of Rs 6,700 crore for procurement of agricultural produce from the state government entities.
These credits support are targeted fulfill the working capital requirements of farmers and help them in meeting their post harvest requirements.
POST COVID SCENARIO: A BIGGER PICTURE:
In order to tackle the pandemic and avoid the inadequacies that can tarnish the growth prospects as well as the trade in agriculture the government introduced some measures which will help the Indian Agricultural sector tackle the hindrances introduced during the pandemic.
AGRICULURAL CREDIT FACILITIES:
The government to fulfill the higher credit requirements of farmers in the agricultural as well as some of its allied sectors has increased the agricultural credit target from 15 crore in the previous year to 16.5 crore in the fiscal year 2021-22 encouraging growth of agricultural fin tech startups as well.
INTEGRATION OF MANDIs WITH E NAM :
The government promised the integration of 1,000 mandis with the National Agricultural Market or eNAM which is a pan India e-trading portal. This decision was made in order to promote competitiveness, fair trade practices and transparency in the agricultural markets.
This step was further taken highlighting the current situation of COVID 19 in India which has had an adverse effect on offline trading markets.
MICRO IRRIGARTION FUND:
The government decided to double the Micro irrigation fund which was introduced by NABARD in order to achieve the goal of ‘per drop more crop’. It as been doubled to 10,000 crores for efficient utilization of water in agriculture.
RURAL INFRASTRUCTURE DEVELOPMENT FUND:
The government has proposed to increase the allocation of rural infrastructure development fund from 30,000 crores in the previous year to 40,000 crores this year with the sole purpose of improving infrastructure in the country.
STAND UP INDIA SCHEME
Stand-Up India is a scheme launched by Government of India in order to grow and facilitate entrepreneurship and development among SC, ST and women communities .
Under the ‘Stand Up India’ scheme, the government has also proposed to include credit for allied sectors of animal husbandry, fishing, etc .This Scheme facilitates bank credit from 10 lakhs to 1 crore to at least one borrower from the Scheduled Caste (SC) or Scheduled Tribe (ST) and at least one woman per bank branch.
CONCLUSION:
Despite the blockages, hindrances and problems due to COVID 19 pandemic, AgriFinance is improving in India with quantitative easing of agricultural credit and schemes and COVID relief packages announced by the Government, the situation is improving and getting back on track for achieving targeted growth in this sector.
KEYWORDS: Agriculture, Finance, COVID 19 , Post COVID, Shining Tomorrow Foundation, Farmers, Credit, Debt Trap, Dost Kisan, AgriFinance.
Commentaires