55
sections in financing and finally, to conventional mainstream banking reforms
which generally lead to undermining the supply-leading approach to financial
intermediation which is a proven method of reaching the neglected sections of
society.
While directed credit prescriptions for priority sectors or for agriculture
and weaker sections, could not be given up due to socio-political compulsions,
they have nevertheless been redefined resulting in distortions in their coverage;
the new definitions have included in the targets, types and sizes of loans which
should be considered as commercial propositions for banks not requiring the
clutches of directed credit arrangements; approach to the monitoring of priority
sector targets had become lackadaisical; and the authorities allowed banks to
close their branches in rural areas, let alone continue with the programme of
branch expansion in the 1990s when there was no evidence of excess banking
spread in such areas except measured by the organisational unpreparedness
of the banking industry. Along with these supply-side constraints, as shown
in Chapter 2 earlier, the agricultural crisis as well as the reducing share of
agriculture in total GDP began to constrain the credit absorptive capacity of the
sector, thus placing severe demand constraint on bank credit.
Finally, over a decade’s neglect of agriculture and other informal sectors
gave rise to social revulsion allround
6
. One of its striking manifestations had
been the widespread farmers’ suicides attributable to excessive indebtedness
and the general agrarian crisis. Fairly comprehensive studies have appeared
in literature on farmers’ distress and suicides, though case studies have been
pre-dominantly for five states of Maharashtra, Andhra Pradesh, Karnataka,
Kerala and Punjab which no doubt faced the most severe crises [see EPW’s
special article on the subject on April 22, 2006 and Reddy and Mishra (2009)].
Srijit Mishra’s studies have shown that relatively higher suicides amongst male
farmers are observed in as many as 12 states and two Union territories. They
are: Andhra Pradesh, Goa, Karnataka, Kerala, Madhya Pradesh, Maharashtra,
Sikkim, Tamil Nadu, Tripura, West Bengal, Andaman and Nicobar Islands,
6
Similar deprivations of non-farmunorganised enterprises compelled the government to appoint
a National Commission for Enterprises in the Unorganised Sector (NCEUS) in September 2004
and it has brought out a series of reports on the subject. Three key comprehensive reports
are: (i) NCEUS (2007a):
Report on Conditions of Work and Promotion of Livelihoods in the
Unorganised Sector
(August
). (ii)
NCEUS (2007b):
Reports on Financing of Enterprises in the
Unorganised Sector and Creation of a National Fund for the Unorganised Sector (NAFUS)
(November);
and
NCEUS (2009
): Report on The Challenge of Employment in India: An Informal
Economy Perspective (Chairman: Dr. Arjun K. Sengupta)
(Two Volumes).
The Commission
has recommended a series of measures for the speedy delivery of institutional finance for
unorganised enterprises and towards this end, proposed the setting up of a National Fund.
