Q. In India, which of the following can be considered as public investment in agriculture?

(1) Fixing Minimum Support Price for agricultural produce of all crops
(2) Computerization of Primary Agricultural Credit Societies
(3) Social Capital development
(4) Free electricity supply to farmers
(5) Waiver of agricultural loans by the banking system
(6) Setting up of cold storage facilities by the governments.

Select the correct answer using the code given below:

  • 1, 2 and 5 only
  • 1, 3, 4 and 5 only
  • 2, 3 and 6 only
  • 1, 2, 3, 4, 5 and 6

Answer: (c) 2, 3 and 6 only

Notes:
  • Public investment in agriculture refers to the government’s expenditure on various agricultural projects and programs aimed at improving the agricultural productivity and income of farmers.
    • Public expenditures on agriculture include short-term costs as well as long-term investments.
  • Investment in agriculture and forestry includes government expenditures directed to agricultural infrastructure, research and development and education and training.
  • Fixing Minimum Support Price for Agriculture for agricultural products of all crops and free electricity supply to farmers are subsidies, hence they are not categorized as public investment in agriculture.
  • The waiver of agricultural loans by the banking system is a concession or indirect support. hence it is not considered as public investment in agriculture.
  • Subsidies and incentives are not considered as public investment.
Primary Agricultural Credit Societies (PACS)
  • PACS are village level cooperative credit societies that serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level.
    • Credit from the SCBs is transferred to the District Central Cooperative Banks (DCCBs), that operate at the district level. The DCCBs work with PACS, which deal directly with farmers.
  • PACSs provide short-term, and medium-term agricultural loans to the farmers for the various agricultural and farming activities.
  • PACs deal directly with the rural (agricultural) borrowers, give those loans and collect repayments of loans given, and also undertake distribution and marketing functions.
  • It serves as the final link between the ultimate borrowers on the one hand and the higher financing agencies, namely the Scheduled Commercial Banks, and the RBI/NABARD on the other hand.
  • The first PACS was formed in 1904.
  • Significance of PACS:
    • Access to Credit:
      • PACS provide small farmers with access to credit, which they can use to purchase seeds, fertilizers, and other inputs for their farms. This helps them to improve their production and increase their income.
    • Financial Inclusion:
      • PACS help to increase financial inclusion in rural areas, where access to formal financial services is limited. They provide basic banking services, such as savings and loan accounts, to farmers who may not have access to formal banking services.
    • Convenient Services:
      • PACS are often located in rural areas, which makes it convenient for farmers to access their services. This is important because many farmers are unable to travel to banks in urban areas to access financial services.
      • PACS have the capacity to extend credit with minimal paperwork within a short time.
    • Promoting Savings Culture:
      • PACS encourage farmers to save money, which can be used to improve their livelihoods and invest in their farms.
    • Enhancing Credit Discipline:
      • PACS promote credit discipline among farmers by requiring them to repay their loans on time. This helps to reduce the risk of default, which can be a major challenge in the rural financial sector.
Primary Agricultural Credit Societies