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(b) The second risk preventingmeasure is to introduce better drought
management system based on Remote Sensing technology.
(c)
The third important measure in this area is to strengthen
rural infrastructures. NABARD is engaged in goading state
governments to use RIDF funds for this purpose. Even so, there
is an enormous amount of surplus funds with the banking
system from out of their shortfall in priority sector targets for
agriculture credit. And there are vast infrastructure gaps in
almost all states in the country. Towards this end, ways will
have to be devised to expand further the budgetary allocations
for state five-year plans for infrastructure development. This
will go a long way in strengthening finally the loan absorbing
capacity of farmers.
(d)
And finally, prevention of income fluctuations of marginal and
small farmers in particular can be minimised by promoting
occupational diversifications amongst them. We have explained
the NRLM schemes and the training under RSETIs for the
poor farmers in this respect. The central government, the RBI,
NABARD and the lead banks, will all have to put their heads
together for operationalizing these programmes.
(iii) “Priority Sector” Has Become a Nebulous Concept and it Calls for
a Radical Change if it Has to Serve its Purpose
RBI Governor Subbarao has laid down a cardinal principle in this aspect
which is that “priority sector can deliver on its promise only if the eligible
sectors are restricted to a select few which are important from the perspective
of improving livelihoods ....... the more sectors we include in priority sector
lendings (PSL), the more they will compete for the same fixed pool of resources
and crowd each other out “(Subbarao, August 2012, p.1408).
And yet, in reality there has occurred an unduly large expansion of the
list of eligible categories under the priority sector. A large number of indirect
categories has been added to the list, and that, too at a much higher amount of
credit limits, even of
`
1 crore each, for the purchase and distribution of inputs.
Secondly, contrary to the promise made based on the guidelines issued
on July 20, 2012, very soon thereafter on October 17, 2012, the RBI guidelines
were revised based on feedbacks received from banks, which totally negated
the earlier objectives of “minimising the competition for the same fixed pool
of resources” and excluding the corporate borrowings for direct agriculture
