Banks are sensitive to credit needs of farmers: Agriclture Secy

He said instructions have been issued to mandis and banks asking them to open bank accounts. Farmers need not buy everything at one go, he said, as most of the these things are on credit.

Talking about MSP, he said it is not a subsidy. “For the first time, the government is keen to match the MSP with procurement.”Below is the transcript of Shobhana K Pattanayak’s interview to Prashant Nair and Manisha Gupta on CNBC-TV18.Prashant: The big focus and a lot of the worries have been coming in from the rural side, the rural economy, agriculture essentially because of two reasons. One is of course, Kharif harvesting is underway and Rabi sowing is also underway as we speak or will start very soon. What is the sense that you, at the government, is getting in terms of how the farming sector is getting impacted because of this demonetisation drive?A: The farming sector is doing quite well. We had a bountiful monsoon and the harvest is coming in and we expect a bumper production this year. The Rabi season is on. In fact, sowing has started in a very big way and so far, we have covered close to 226 lakh hectares and we are hopeful that the perpetually shortage of pulses in the agricultural sector is going to be addressed in a very big way because of the bumper production of pulses in the country. So far as the output in rice is concerned, it has been very good. The government has also announced a higher minimum support price for the Rabi crop. The wheat sowing is underway and we are very hopeful of a very good harvest in wheat also. So, overall for agriculture the economy is looking up in a very big way and we have so far not really witnessed problems in terms of our anticipation for the total production in the country.Manisha: As you pointed out, yes after two years of drought and weak agriculture growth, this time around we definitely are working with big numbers as you pointed out. But what is your sense on the whole demonetisation impact on agriculture because there have been various reports from Agricultural Produce Market Committees (APMC) and farmers. The whole cash crunch of course, the government today has opened out more ways, it has been allowed more in sense of numbers, Rs 25,000 per week to farmers and Rs 50,000 per week to APMC traders as well. But until now, the kind of cash crunch that this sector seems to be facing, what is the impact that you see on the agricultural growth going forward?A: So far, we do not anticipate any impact on the agricultural sector. In fact, government has been very sensitive to the needs of the farmers and that is why this morning, the government has taken a decision that each farmer can perhaps withdraw Rs 25,000 per week and the traders also can also withdraw Rs 50,000 just like any other petty businessman.So, this will considerably easy up the difficulties faced and you know that most of the farmers considering that part of India has an informal economy, they have a growing dependence on each other. And we do not expect that they will suffer and we are constantly in touch with the states. Yesterday, there was a video conferencing of all the chief secretaries and we are in touch with them. We have not really felt the heat as you perhaps mentioned. So, this is one aspect.Secondly, most of these inputs that are disbursed in the rural country side by certain societies, which anyway give them some credit also and the banks are fully sensitive to the credit needs of the farmers. The Kisan Credit Cards and the line of credit available to the farmers for Rabi is on full swing.We have a target of Rs 5,000 lakh crore to be disbursed for the Rabi loan, which is underway. I can say with confidence that even in some places, the Fasal Bima Yojana, the payment of premium has also met the targets and we do not see any problem. And if there are certain problems we are fully sensitive to address them.Manisha: As you mentioned, much of the work that the farmers do, happens on credit, but apart from that, everything else starting from agents, from transport, cash, seed buying and of course, apart from that, the seeds, pesticides, fertilisers, everything perhaps mostly happens in cash. Do you think the farmers will be able to shift from cash to, online payments and cheques pretty soon? A week to 10 days is too small a time for them to start shifting or shift their consumption patterns, for that matter.A: Instructions have been issued to all the Mandi Parishads and all the Mandis and also the banks nearby that they must proactively open bank accounts in respect to the farmers who do not have a bank account.Secondly, you yourself admit that most of these things are on credit and part of the requirement of farmers, let us say per acre -- in our country there are small and marginal farmers, not owning more than five acres of land -- and even if you admit that depending on the scale of finance for the particular crop, they need not buy everything in one go. They need right now, is the cost of seed and perhaps the cost of fertiliser when it needs to be applied. So, that constitutes a small portion of the total sowing process.So, at present there is no problem and the withdrawal of Rs 25,000 per week is considered quite adequate for meeting the needs of the farmers at present. So, we are, going to include all those of farmers who do not have a bank account and we will financially include them.Manisha: You also mentioned about the MSP numbers and yes, we have seen last three MSP increases quite on the higher side and while of course, it is a good news for farmers there, but we also heard on the previous week on how the US and the European Union have questioned India on these higher MSPs. How has India justified that and what are the kind of procurement numbers or import and export numbers that you are working with for many of these commodities?A: MSP as a regimen is in vogue in India for a considerable number of years and I am certain that the World Trade Organisation (WTO) is aware of it. So the type of problems which you mentioned may be of a different nature which needs to be addressed separately because it is not something new which the government is doing every season. Both in Kharif and Rabi we announce the MSP. And MSP is not a subsidy, so no country should have any issue with that.However, let me tell you that the government is very keen about matching the MSP with procurement and the government has gone ahead and created this buffer stock of two million tonnes of pulses and we have not only purchased moong and urad during the last Kharif season, but we are fully prepared to even purchase the toor, which is going to shortly arrive in most parts of the country. So, MSP combined with procurement is a big boon for the farmers.Prashant: Could you give us some clarity on what the decision on district cooperative banks has been because there were reports that they have been directed not to exchange or even accept Rs 500 and Rs 1,000 notes.A: The Ministry of Finance would be in a better position to address this issue as it is purely not an agricultural issue.Prashant: But as of now, because you must be in touch with farmers and farmer unions, etc. on the ground you are in touch in terms of what is going on. Are they being able to exchange notes at these cooperative banks? As of now, what is the situation or are they not accepting these bills?A: There has been a request and the Ministry of Finance will address this issue.Also watch accompanying video of Vijayaraghavan G, Analyst-Agri-Inputs & Midcaps at IDFC Securities.