The rationale of priority sector lending deserves a comprehensive review. Do you agree with this view? Comment (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· In our country, traditional methods of financing have by and large delivered, and will continue to play a role; but we need to recognise that they are inefficient systemically.
· Warehouse receipt financing works on the basis of goods brought into an accredited warehouse for which the warehouse-keeper issues a receipt of storage, indicating quantity, quality and other parameters.
· India’s priority sector lending policy has the right intention of supporting the sections that are critical for the economy but are generally vulnerable and deserve support. Such sections include farmers, exporters and micro, small and medium enterprises.
· The OECD countries spend as much as $500 billion annually on ‘farm support’, a euphemism for subsidy. Of this, $80-90 billion is spent on what is described as ‘general services’ which cover farm research and development, agri infrastructure and innovation systems, quality inspection, control and certification, market development, bio-security, and so on. The expenditure is crop neutral.
· The government has no doubt created the Agriculture Infrastructure Development Fund (AIDF), but the nation needs to get a report card of its progress.
· Lending institutions must demonstrate a moral duty towards the society and environment protection. The rationale of priority sector lending deserves a review.
