NEW DELHI: The Centre on Monday unveiled a credit guarantee scheme (CGS) to help small farmers who engage in distress selling.
Launched by Union Food and Consumer Affairs Minister Prahlad Joshi, the scheme provides a corpus of Rs 1000 crore to help farmers- especially small and marginal- access post-harvest loans using electronic warehouse receipts.
“The scheme will revolutionise agriculture credit systems and reduce banks’ reluctance to provide loans to farmers,” said Joshi.
Currently, farmers are compelled to sell their produce even if the price crashes to get money to invest in the next cycle of crops. As this scheme takes off, farmers will get the opportunity to submit their produce and get issued electronic negotiable warehouse receipts (e-NWRs) by Warehousing Development and Regulatory Authority (WDRA) registered repositories. It will act as collateral for banks to issue required loans. Farmers can sell their produce when the price goes up. The banks need to adopt a liberal approach towards farmers in settling loan amounts and other finances like e-NWR receipts, he stated.
“Farming can be sustainable only if it is economically viable and the scheme is meant for it,” said Joshi. He further emphasized that India’s food security needs to be robust as India will act as food security for other countries in the coming years.
Invoking the PM’s commitment towards farmers’ welfare, the union minister said that fertilizer prices have globally increased due to ongoing conflicts. In contrast, the government of India provides urea to farmers at the lowest rates in the world. Only 2-3% of big farmers use the CGS facility.
“We need to introduce interest subvention schemes to encourage small farmers to benefit from this scheme,” said Faiz Ahmad Kidwai, Additional Secretary, Ministry of Agriculture and Farmers’ Welfare.
The current post-harvest lending stands at around Rs 40,000 crore out of total agricultural lending Rs 21 lakh crore.
“Currently, the e-NWRs lending is a mere Rs 4,000 crore against the potential Rs 5.5 lakh crore,” said Sanjeev Chopra, secretary of Department of Food and Public Distribution.
Chopra emphasized that after the launch of the scheme, the post-harvest lending will grow to Rs 5.5 lakh crore in the next 10 years. “For this, banking and warehouse sectors coordinated efforts required to achieve the Rs 5.5 lakh crore target,” said Chopra.
The secretary also stressed the need to streamline the e-Kisan Upaj Nidhi online platform, create awareness among farmers about pledge financing, review depository charges and increase warehouse registrations beyond the current 5,800.
The secretary added that creating awareness about the CGS-NPF scheme, making National e-Repository Limited and Countrywide Commodity Repository Limited repository charges reasonable and working towards registering more warehouses need to be prioritised.
A HELPING HAND TO SMALL FARMERS
The scheme aims to provide credit facilities to small farmers to prevent them from distress selling
Currently banks are reluctant to provide agriculture loans to farmers in the absence of a collateral
Under the revamped credit guarantee scheme, banks will issue agri loans against warehouse receipts (e-NWR)
Farmers can deposit their produce at the nearest warehouse to obtain the e-NWR
Farmers can sell the produce only after the price goes up. In the meantime, they can get a loan over their produce to invest in the next cycle of crops
Currently, the e-NWR lending is mere Rs 4000 CR against the potential of Rs 5.5 lakh crore. Most of the lending is done by traders and big farmers.