Its loans are smaller than those given by the Bank of Baroda branch in the village. But it is faster at lending to small farmers. Says Rashid Gulab Sheikh, a farmer in his late fifties, “If you are a two acre farmer, a loan from the bank (Bank of Baroda) will take 2-3 months to come. The Society gives the loans in 8 days.”
Mardi’s ‘Society’ Bank is a Primary Agricultural Cooperative Society (PACS). Low-profile cogs in India’s agricultural credit machinery, these are the field outposts of the three-tiered cooperative society lending structure that currently accounts for 17% of all agricultural loans.
Over the last few months, PACS have been seeing a pitched battle over their future. This January, the report of an RBI-appointed committee to study the functioning of the cooperative lending structure recommended they be converted into banking correspondents for District Credit Cooperative Banks – the second tier of the cooperative society lending structure. Once the RBI accepted the recommendation, Nabard, whose chairman Prakash Bakshi was chaired the RBI committee, issued operational guidelines.
Such a transition, says the rural lending institution, is the only way to save the PACS. However, opponents of the plan, like IIM Bangalore professor and rural finance expert MS Sriram say the idea will kill the PACS, not save them.
in the days after the cbi’s 14th FIR, delhi’s political circles crackled with ignorant speculation.
the FIR was the congress’ way of warning industry against supporting narendra modi, the BJP’s prime minister aspirant; the FIR had been filed to discredit pc parakh, the former coal secretary; a rival business group was trying to scupper industrialist kumarmangalam birla’s chances of getting a banking license…
in the process, a key question escaped scrutiny once again: how are India’s attempts to fix the mess created by coalgate progressing?
coalgate, remember, is not about small, undeserving companies getting coal blocks. nor is it about the government blowing a chance to rake in cash by auctioning them. it is about a resource grab where a handful of companies cornered 44 billion tons of coal, leaving coal india (CIL) with just 49 billion tons to meet coal demand from the rest of the industrial sector.
as such, its fallouts are serious. by concentrating ownership of coal reserves, coalgate has distorted the thermal powerplant market. power plants which have to import 35% of their coal — due to a weakened CIL’s inability to meet everyone’s coal requirements — cannot compete with power plants with captive blocks. projects have been abandoned. consolidation and bank write-offs look likely.
it has also pushed the country towards an oligarchic future and compromised india’s energy security. it has also accelerated the loss of india’s central forests and imperilled the rivers that originate there. CIL, with a range of coal blocks to mine in, could defer mining in pristine forests. a company with a single block doesn’t have this luxury.
over the past year, multiple institutions, from the supreme court to the CBI to the coal ministry, have been examining different aspects of coal and coalgate. between them, the country has a rare second chance to get its act on coal together, to set in place a new architecture which provides cheap, plentiful coal equitably till the country can move to cleaner fuels.
the question is whether the corrective steps underway are taking us in such a direction.
on vikram akula’s attempt to get back into sks microfinance, by my colleague john samuel raja and me.
This January, the competition regulator sent an independent report to the ministry of agriculture on why onion prices spiked abruptly in 2010, a pattern that is playing out again today, with prices ruling at Rs 60-80 a kg for the last two months.
This 86-page report, one of the clearest descriptions of how India’s agricultural markets function, made some stinging observations: traders colluding and acting like a cartel, the unequal relationship between traders and farmers and exports not being calibrated to domestic demand, all being perpetuated by loopholes in the rules.
While this report, titled ‘Competitive Assessment of Onion Markets in India’, studies a crisis that happeend three years ago, it warns of why, unless systemic change is not effected, the spike in onion prices will keep happening in the years to come, especially at this time of the year.
This report—commissioned by Geeta Gouri, member, Competition Commission of India, and prepared by researchers at Bangalore’s Institute for Social and Economic Change (ISEC)—has remained in the ministry’s cold storage. “There has been no response from the ministry at all,” rues Gouri.
a quick and dirty story on why, every so often, onion prices spike so abruptly. i need to get into more detail on all this.