New Delhi, October 18
Admitting the failure of institutional mechanism in meeting the needs of the farmers, Prime Minister Manmohan Singh today initiated a debate on roping in and regulating money lenders in extending farm credit to alleviate the agricultural crisis facing the nation.
“What do farmers need - a lower rate of interest or reliable access to credit at reasonable rate?….Do we need to bring in money lenders under some form of regulation,” he pondered while inaugurating the second agricultural summit here.
Dr Manmohan Singh said: “It is necessary that we find answers to these questions in near future as there is a crisis in agriculture in many regions of the country.”
According to a World Bank study 70 per cent of poor households in villages have no access to formal banking; rural borrowers pay up to 42 percent of their loan amount in bribes to officials; and it takes an average of 33 weeks to get a loan approved in the rural India.
Prime Minister’s poser assumes significance in the light of the Nobel Peace Prize to Bangladesh's Muhammad Yunus and the Grameen Bank for micro-credit mechanism and its success in fighting poverty and empowering them.
Even the Reserve Bank of India has set up a working group to review money lenders legislations following requests from some states and it is mulling at the option of including micro-finance institutions (MFIs) in the list of money lenders to be monitored and putting a cap on interest rate to be charged by them.
The Prime Minister also wanted suggestions on enhancing the institutional framework such as for the self-help groups and micro-finance institutions for improving the lot of farmers.
On checking inflation, which is hovering above 5 per cent now, he added: “While the government will do whatever is necessary to keep prices under check and ensure moderate rates of inflation, we cannot sacrifice the interests of the farming community”.
