Subsidy to farmers, lend through NABKISAN

Hans reported RBI Governor expressed hope, while reducing repo rate to 4% lowest in the history, that Agriculture and allied activities are beckoning hope for economic revival, now.

Million dollar question is - 'Why RBI did not extend opportunity to Farmers Produce Organisations (FPOs) and its Members to grow through NABKISAN?'

FPOs are basically collective forum of farmers. Govt. says FPOs are better platform for collective bargaining facilitating purchase of seeds and fertilizers as well as marketing their produce to provide improved financial benefits to farmers.

NABARD formed subsidiary – NABKISAN – for providing credit to FPOs exclusively and bulk lending to its members, without collateral security. Most of FPOs have more than 500 to 1,000 members at village level.

However, credit limit of NABKISAN for each FPO and its total members, irrespective of total number, is maximum Rs. one crore, highly inadequate.

To strengthen allied activities like dairy and poultry etc., common household activities for women in villages, following measures are suggested:

1. NABKISAN has to increase loan limit, substantially, based on number of members in FPO, presently totally ignored

2. CGTMSE Scheme allows two crores, without collateral security even to an individual, hence same limit to be given to cater needs of FPO alone, apart from separate limit to its members based on their numbers

3. Subsidy benefit is to be extended to members of FPO as most are small and marginal farmers. Whey they should be denied, when same available, if loan taken through commercial banks? Fear need not exist as NABKISAN is totally funded by NABARD and commercial banks.

4. Recovery is better from loans extended through FPOs, unlike commercial banks, as FPOs exist along with farmers in villages.

5. Encourage NABKISAN for bulk lending through FPOs as offices exits in every district.

C. Rama Gopal

(A practicing Chartered Accountant, Empanelled consultant to Andhra Pradesh Food Processing Society and Small Farmers Business Consortium (SFAC), with passion to be part of rural growth, having authored six books on Finance & Management)