Strong rural banking network needed to replace money lenders, says Chitale

Speaking to The Indian Express, Chitale justified the Rs 34,000-crore loan waiver for 89 lakh farmers and reflected on the key areas that had been long ignored resulting in the loan waivers announced by successive governments failing to help farmers.

Written by Shubhangi Khapre | Mumbai | Published:June 27, 2017 4:47 am
Agriculture and water management expert Madhav Chitale, Strong rural banking network, NABARD status report (2017-18) , Maharashtra Economic Survey (2016-17), Mumbai News, Indian Express News “While we have always focussed on loan waiver, the efforts to maximise the crop credit and crop insurance bracket have been lacking,” added Chitale. (Representational Picture)

Agriculture and water management expert Madhav Chitale believes a strong rural banking network replacing the existing pre-Independence-era money lending system in Maharashtra can go a long way in giving fresh impetus to the rural economy and stop exploitation of the poor and needy farmers. Speaking to The Indian Express, Chitale justified the Rs 34,000-crore loan waiver for 89 lakh farmers and reflected on the key areas that had been long ignored resulting in the loan waivers announced by successive governments failing to help farmers.

“Let us take the examples of Japan, Israel, Holland and England. Why have they succeeded in making agriculture a success story. In all these countries, the industrial development was founded on the backdrop of strong agriculture base. As a result, they have always given greater significance to consolidating their rural economy,” he said.

The NABARD status report (2017-18) highlights the disparity in the rural banking system with more economically prosperous western Maharashtra having better access compared to backward Vidarbha and Marathwada. The total number of bank branches of all types in western Maharashtra is 6,090 compared to Marathwada’s 1,886 and Vidarbha’s 2,626.

The total number of bank branches in Mumbai and its suburban region stands at 2,138. The credit outflow for a region is directly proportional to the number of bank branches in that region. Chitale said the financial uncertainty in the agriculture sector was not a problem confined to Maharashtra or India alone. “It is a phenomenon every agriculture-driven nation has to cope with every year.

But what marks the difference is the ability to provide the mechanism that has strengthened the rural economy,” he said. In the context of Maharashtra, Chitale said: “I would suggest we have to strengthen our rural banking network to cover all villages. The concept of ‘savkari’ (money lenders), which has been in existence before the advent of the European banking system, cannot be an alternative to provide financial support to farmers.”

Chitale’s concerns are substantiated in the state’s Economic Survey (2016-17) that points to 40 per cent increase in farmers seeking financial loans from private money lenders. Along with higher capital investment in agriculture, he said, the state government would have to bring each and every farmer under crop insurance cover for financial security.

“While we have always focussed on loan waiver, the efforts to maximise the crop credit and crop insurance bracket have been lacking,” added Chitale. The disconnect between the investments and returns, the biggest challenge for farmers, has its roots in the system, according to Chitale.

“To fix these problems, the government will have to promote the concept of contract farming where farmers will get assured return on their crops. Secondly, group farming, which has been initiated, is a way ahead to minimise the investments cost thus minimising the losses.”

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