Freeing agri markets

With reference to ‘Why small, marginal farmers get just 40 per cent of total Agri credit’, the loans extended to small and marginal farmers is based on land holdings and not on limits/outstanding. A marginal farmer is one who has land holding of 1 hectare and small farmer is one who has land in the range of 1-2 hectares. The loans covered under 2 per cent interest subvention scheme conveys to a major extent, the short-term crop loans extended to small and marginal farmers. The scheme is available for all loans extended to individual farmers up to ₹3 lakh for a maximum period of 1 year and a further concession of 3 per cent is available for those crop loans which are renewed/repaid within time schedule (making the effective interest rate at 4 per cent). The interest concession is available for a further period of six months for keeping in warehouses for better price realisation and here also the loan continues in the name of the farmer. As the subvention scheme is only for individual farmers, there is no way a large company or any non individual for that matter can avail agri loan at subsidised rates. The revised definition of priority sector keeping a sub-target of 8 per cent to small and marginal farmers was introduced only to ensure that they get their due share in bank credit.

Even the level of 5.5 per cent and 16.5 per cent under agriculture and small and marginal farmers, respectively, reported by private banks for March 2017, should be taken with a pinch of salt, as significant portion is achieved through PSLC (priority sector lending certificate), which do not pass on credit risk and expires on the first day of next year.

Coimbatore

With reference to ‘Unshackling agri markets’, obviously when current age old practices are broken, traders and middlemen would be hit but for the larger interest of farmers and farm producers, it is indeed a great initiative.

Most of the time our poor farmers are literally at the mercy of these commission agents or middle men and since they lend money to farmers at exorbitant prices, farmers end up suffering. More market yards will only take market closer to farmers, in turn reducing their travel time and money to sell their produce.

Noida

With reference to ‘Petro politics’ (December 10), there can’t be two views about the fact that there is a dire need for long-term policy for ‘Oil Economics’.

India must urgently put in place a long-term plan to safeguard its own economic interests irrespective of the highly fluid global market situation.

However, the retail users of various petroleum products continue to be at the receiving end despite a considerable drop in the global oil prices. This is due to the high central excise duty apart from varied levels of the local levies.

Let us always keep in mind that the petro-products’ prices may once again see an upward trend in near future as the OPEC is understood to be currently toying with the idea of cutting the crude oil production to rein in its extant declining prices. So, better watch out.

New Delhi

With reference to ‘Liquidity management in the limelight’ (December 10), the has RBI always been instrumental in containing the inflation at the same time keeping the economic growth intact. In the December 6 policy meeting, the MPC left the policy rates under Liquidity Adjustment Facility unchanged (maintained status quo).

To boost a stagnant economy in the long run, it is prudent to conduct the open market operations (for the purchasing of government securities in large) thereby infusing liquidity in the system but the LAF, like any another window, see the economic scenarios with short-term price levels in mind. Hence, the OMOs and LAF may not be moving in the same direction. As a relief for the banks, reduction in CRR (unproductive liquid assets) should be done but can't be pursued continually.

Apart from the measures mentioned in the article, the RBI may also mull over other qualitative measures such as credit to selective sectors.

Cuddalore District

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