The Centre’s recent approval of a plan to establish 2 lakh Primary Agricultural Credit Societies (PACS), dairy, and fisheries cooperatives across India in the next five years is aimed at reinforcing the cooperative movement. In line with the Union Budget 2023’s allocation of Rs 2,516 crore towards the computerisation of 63,000 PACS over the next five years, this move aims for more transparency and accountability.
Main Features of the Plan
The Ministry of Cooperation-initiated plan is focused on enhancing the country’s cooperative movement and widening its base to the grassroots. The idea is to create viable PACS, dairy, and fishery cooperatives in villages whilst reinforcing the existing ones. This will be achieved through uniting various schemes of the Ministry of Fisheries, Animal Husbandry & Dairying under the ‘whole-of-government’ approach.
An action plan for executing this project will be prepared by NABARD, National Dairy Development Board (NDDB) and National Fishery Development Board (NFDB). Several department-specific components are also included in the plan. Under the Department of Animal Husbandry and Dairying, the National Programme for Dairy Development (NPDD) and Dairy Processing & Infrastructure Development Fund (DIDF) will be utilised. Additionally, the Pradhan Mantri Matsya Sampada Yojana (PMMSY) and Fisheries and Aquaculture Infrastructure Development (FIDF) will be used under the Department of Fisheries.
Finally, to ensure smooth execution of the plan, a High-Level Inter-Ministerial Committee (IMC) will be set up under the Ministry of Cooperation.
The Importance of PACS
Currently, there are approximately 1.6 lakh panchayats without PACS and nearly 2 lakh panchayats devoid of any dairy cooperative society. PACS have a major role in the distribution of Kisan Credit Card (KCC) loans, accounting for 41% (or 3.01 crore farmers) of all such loans given in the country. According to NABARD’s 2021-22 annual report, 59.6 per cent of the total loans were allocated to small and marginal farmers. Moreover, these societies also provide warehousing services to help farmers preserve and store their food grains.
Understanding PACS
PACS are ground-level cooperative credit institutions that offer short-term, and medium-term agricultural loans to farmers for various agricultural and farming activities. Functioning as the base of the co-operative banking system, they form the major retail outlets of short term and medium-term credit to the rural sector. At the state level, State Cooperative Banks (SCB) head this three-tier cooperative credit structure, with credit transferred to District Central Cooperative Banks (DCCBs), which in turn work with PACS.
The Way Forward
To enhance their ability to attract more deposits and loans from superior financing agencies, PACS need to work on improved coverage, reorganisation, and increased resource-mobilization capacity. Consistent policy support over a prolonged period and recognition in the Government of India’s vision for Atmanirbhar Bharat and Vocal for Local initiatives can help realize their potential as building blocks for a self-sufficient village economy.
UPSC Civil Services Examination: Previous Year Questions
Discussing certain previous year questions from the UPSC Civil Services Examination can further illustrate the importance of this topic. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks. One of the most crucial functions of DCCBs is to provide funds to PACS.
Additionally, Urban Cooperative Banks’ in India are regulated by local boards established by the State Governments. These banks can issue equity shares and preference shares. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.
Co-operative banks are financial entities owned by their members who simultaneously function as their bank’s owners and customers. Established by State laws, these banks lend as well as accept deposits with the aim of funding agriculture and allied activities, and financing village and cottage industries. National Bank for Agriculture and Rural Development (NABARD) functions as the apex body of cooperative banks in India.
