13/06/2020 - Government Policies

IAS Parliament 4 years

KEY POINTS

· The KCC concept was developed by NABARD in 1998 and launched by the banks. It enables farmers to avail credit for crop production, consumption and maintenance of machinery, by simply swiping a RuPay debit card.

· A farmer requires many ingredients for her/his farming operations; farm and weather advisory, seeds, irrigation, fertilisers, pesticides, credit, farm labour, agricultural machinery and transparent markets almost in this order.

· The Ministry of Finance and banks, working in unison, have created the JAM trinity and are leveraging its strengths. The nine crore PM-Kisan and seven crore KCC beneficiaries are a result of this. The expansion and coverage of gaps is a matter of time. KCC is not a number generated by bankers, and is in fact a transformative initiative. Having the State governments acknowledge that banks are serving its own people and joining them will be the force multiplier that makes DFI real.

· The process of issue of KCC involves a KYC prepared by bank and validation of land records and creation of charge by the State Revenue Department. This process takes time, and the farmers are usually left to fend for themselves. Agriculture Departments are usually not involved in many States, even though the KCC is for agricultural operations.

· The Loan Eligibility Card of the Government of Andhra Pradesh under the Land Licensed Cultivators Act, 2011, is a right step in ensuring KCC and crop insurance to farmers with no clear land titles. Other States have not yet moved on this, despite the NITI Ayog’s prodding.

· Digitisation of land records, another key ingredient, is not yet complete across India. Bankers are unable to create charge online even in those States where land records are digitised because of bandwidth issues. The loaning process and documentation vary across banks, and the final KCC docket is a big bunch of documents that takes time to assemble (by farmers or consultants) and get sanctioned by bankers.

· When State governments come on board, many things become possible: simplified application in vernacular language, identifying uncovered farmers, appropriate scales of finance so that correct amounts are disbursed as loan, facilitation in KCC application submission, timely disbursements of crop loans, operationalising other loans which KCC encompasses, advisories and remunerative prices leading to farmers’ welfare.

Aradhana Tiwari 4 years

The Kisan Credit Card Scheme was introduced in India in 1998-99 by NABARD has since become a flagship program providing access to "short term credit in the agricultural sector".

As part of the second and third tranche of "Atma Nirbhar Bharat Abhiyan relief measures", government launch a special drive to provide all PM-KISAN scheme beneficiaries with Kisan Credit Cards (KCC), under which they can avail "concessional loans at low interest".

>>> The various strategies that are required to make the Kisan credit card accessible to all farmers :

- Insurance of crops can play a role in stabilising the growth of agricultural sector. Therefore, if there are certain hurdles in it, State govts in consultation with GOI may sort them out.

- Although KCC issuance comes under the banks’ purview, having the State government help clear roadblocks like land titles and documentation will make credit accessible to all farmers.

- In order to encourage small and marginal farmers which are the most vulnerable group the rates of premium should be kept low and for other farmers it needs to be revised downward suitably.

- The PM KISAN scheme should endeavor to cover all types of crop so that it can be made applicable to the entire credit limit under Kisan credit card.

- Provisions in the line of Govt of Andhra Pradesh's "The Loan Eligibility Card" needs to be there in other states also- in ensuring access of KCC and crop insurance to share-croppers/tenants and newly-created marginal farmers with no clear land titles.

>>> Conclusion :

India is an agrarian economy, with about 65 per cent of the population in rural areas and 50 percent of the workforce in agriculture.

Agriculture credit will thrive only when agriculture blooms.