Vinson Kurian

Thiruvananthapuram, March 1

COOPERATIVE lending institutions, one of the key pillars in the agricultural and rural credit structure in the country, find the Union Budget uniquely special for more than one reason.

According to Mr K. Sivadasan Nair, Chairman, National Cooperative Agriculture and Rural Development Banks' Federation Ltd, it is for the first time that a Finance Minister has managed to get over a mental block that has traditionally prevented him from extending due credit to cooperative agricultural lending institutions for the role they play in the realm of agricultural and rural development.

For one, the proposal for bringing an additional 50 lakh farmers under agriculture credit umbrella will help improve the profile of credit, given loans have traditionally been perpetuated and recycled through renewals year after year with no net customer accretion. The Finance Minister has taken recourse to an ingenious approach for breathing fresh air into the credit system, Mr Nair told Business Line here.

The special financial assistance to cooperative credit institutions made for a nice gesture, which would help the latter wipe out accumulated losses and strengthen their capital base. Mr Nair, however, rued the fact that no specifics were spelt out in this regard.The `in-principle' nod to the Vaidyanathan Task Force was not exactly flattering since many of the recommendations were `impracticable', he added.

Mr Nair saw great merit in the significant allocations for rural infrastructure development, commissioning of the National Horticulture Mission and irrigation, all of which will go to boost the credit delivery mechanism.

According to Dr Thomas Varghese, who served the State Agriculture Department in various capacities, reaching credit to 1,05,000 farmers and the further enhancement of the target is all fine but the same was not reflected in agricultural productivity which, by the Finance Minister's admission, has declined.

Dr Varghese was disappointed with the crop diversification programme, which was wrongly conceived with respect to choice of crops in different States. Also, farmers needed to be offered `assured prices' for their produce, not `support price'. The assured price must aggregate to cost of production plus a 10 per cent margin.

Dr K.N. Syamasundaran Nair, former Vice-Chancellor of the Kerala Agricultural University, commended the initiatives in rural infrastructure and farm lending but underlined the need for the State Governments getting their act together in implementing the various policies and programmes.

The National Horticulture Mission is a very significant initiative replete with possibilities of all kinds for States such as Kerala.

He singled out the significant allocation for micro-irrigation programme for special mention.

The proposal for pruning of subsidy in the agricultural sector is unwarranted since the prevailing rates have been well below the WTO-ordained ones, said Dr K.N. Harilal, Fellow of the Centre for Development Studies (CDS), here. The failure of the price stabilisation fund had clearly exposed the Government's failure to assure reasonable prices for agricultural produce.

(This article was published in the Business Line print edition dated March 2, 2005)
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