Finance Minister Pranab Mukherjee on Tuesday exhorted the National Bank for Agriculture and Rural Development (Nabard) to deploy new technology, innovate and create financially viable models to take forward the process of financial inclusion.
Addressing Nabard's board meeting on its 29th Foundation Day here, Mr. Mukherjee said the nation's primary expectation from banks, including the farm lending agency, in the next decade was to eradicate financial exclusion and he expected Nabard to contribute its share in the process.
Mr. Mukherjee pointed out that even as India stands out as one of the few large economies that had regained its pre-crisis momentum and was poised to grow fast, the biggest challenge before the government was to deepen and broaden the inclusive nature of growth, that being the central focus of its agenda.
Stressing on the need to raise farm productivity, Mr, Mukherjee noted that though the total amount of credit to agriculture had grown over five-fold in the last seven years, there had not been any significant improvement on the productivity front. Alongside, while the total flow of credit to agriculture had shown consistent growth, the number of accounts had not grown commensurately, clearly showing that credit flow to small farmers had not reached in sufficient measure. This situation, he said, had to be corrected and Nabard, in particular, had a major role to play in this regard.
Mr. Mukherjee also asked Nabard to interact with private sector players to fill the gap in storage capacity requirements for which a dedicated allocation had been made for warehousing infrastructure for farm and allied sector produce under the ‘Rural infrastructure development fund' (RIDF) in the budget for 2011-12. With land holdings becoming smaller and oral tenancy on the rise, he pointed out that a large number of marginal and small cultivators — who are lessees and oral tenants — were being excluded from the ambit of the ‘Kisan credit cards' (KCCs) and said that there were also a large number of inactive cards which need to be activated for becoming the primary vehicle of credit to agriculture and allied activities.
The Finance Minister said that Nabard's massive programme of capacity building for training elected representatives of cooperatives as well as their own staff should be followed up by improving the competitiveness of the cooperatives themselves by leveraging technology through computerisation of their operations. The government, he said, was committed to strengthening Nabard to make it more effective in its mandated areas of work and was providing an additional capital of Rs.3,000 crore to enhance its capital base.
Though Nabard is not commercial in its operations, Mr. Mukherjee said the farm development agency should aim for better margins so that the operating surplus was ploughed back into developmental activities such as improvement in rural infrastructure along with increased credit flow to agriculture and other allied sectors.
