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‘Private markets help farmers in price discovery’
Mumbai | July 2020
G.R. Chintala, who has assumed office as the chairman of NABARD amid the COVID-19 pandemic, said in an interview that he welcomed reforms in agricultural marketing, while also highlighting the bank’s preparedness to support markets in the private sector. Excerpts.
  • During these difficult times, agriculture seems to be the saving grace. How is NABARD geared up to help farmers in this period?
To help the agriculture sector, NABARD started providing Special Liquidity Fund assistance to enable rural financial institutions to give loans to farmers ahead of the season.
Besides extension of moratorium on term loans till August 31, 2020, a special drive to provide concessional credit of ₹2 lakh crore to 25 million farmers under the Kisan Credit Cards is on.
Formation of an Animal Husbandry Infrastructure Development Fund with ₹15,000 crore and Agri Infrastructure Fund — with ₹1 lakh crore with credit guarantee support to lending institutions and interest subvention to beneficiaries — will help spur investment in milk processing and post-harvest infrastructure at the farm gate.
  •  With a new law on APMCs, how will NABARD cope with the changing agricultural market environment? Will it lend to the private sector to establish markets?
NABARD welcomes the Centre’s move of setting the tone for reforming agricultural marketing. Very few States have initiated reforms in the APMC Act, which will encourage private sector investment in marketing. The amendments to enable setting up of private marketing have been approved by 18 States and rules have been notified by 10 States. We are ready support private markets by creating a separate fund, if marketing reforms to enable private markets and e-trading are introduced, as these help farmers in better price discovery.
  •  DCC banks and RRBs have been facing liquidity crises. How will NABARD strengthen these institutions?
For crop loan requirement, NABARD extended additional refinance support of ₹30,000 crore to enhance liquidity support to RRBs and cooperative banks, and will benefit 3 crore farmers.
As a result, these banks are not facing any liquidity crisis. For RRBs, NABARD is playing a proactive role in the on-going amalgamation process and capital infusion.
Under the Cooperative Development fund, we have sponsored establishment of PACS Development Cells in DCC banks and are supporting creation of infrastructure in PACS. We have devised and implemented a Corporate Governance Index in rural cooperative banks with a view to ensuring systemic improvement in governance.
  • Are States seeking higher allocations for rural infrastructure projects, given their revenue shortages?
No doubt, many States are requesting higher allocations. Since March 1, 2020, ₹11,451 crore has been released to States/UTs for development or strengthening of critical rural infrastructure under RIDF. In 2020-21, ₹1,176 crore has been released towards States’ share of participating governments for implementation of ongoing irrigation projects.
We have received requests from some States for additional allocation under RIDF. Total sanctions in the current year are expected to be in excess of last year’s.
  • How are farmer producers’ organisations shaping up; how are their funding needs met?
FPOs have started taking shape and 80-90% are members with small landholdings. About 7,000 FPOs exist in the country. Social capital building, availability of professional manpower in rural areas and collateral-free credit support on affordable terms are major challenges in promoting FPOs. NABKISAN Finance Ltd. extended collateral free loans of ₹250 crore to 550 FPOs. Over 50 FPOs were given loans during the lockdown.
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