Just the other day came across this piece of news that ADB is going to grant a loan to India, to the tune of around Rs 4500 Cr. It is to help out with the agri-distress and will be disbursed through the co-operative banks. India will have to repay it in 15 years....
Now, I wonder whether this loan is indeed needed. We now have forex reserves in excess of $ 160 bn and our economy too, is clocking good growth rates (9.1% for the first half of 06-07 - news just trickling in), albeit agriculture being the laggard. I believe that we have enough domestic resources to meet all the needs of our poor farmers who are the victims of short-sighted and restrictive policies of the government (More on that in a later post). What we need is an efficient credit delivery system, along with policies that free agri-trade. Here, the problem, as I see it, is the involvement of co-operative banks. Anyone who has some idea of their functioning will testify that it's the place for the cronies and chamchas of corrupt politicians. All the money that will come from the ADB will simply vanish into their pockets! The intended beneficiaries will be left high and dry.
Any reform of agriculture will / should necessarily involve de-politicising the co-operative banks and bringing them under the direct control of the RBI. The dual control of urban co-op banks (1853 of them) - by Registrar of Co-op Societies and the RBI - in vogue today is doing no good.
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