APPROACH TO RURAL LENDING and APMC

There are basically two types of approaches through which banks lend in rural areas. One is branch based, in which all activities like sourcing, disbursal, post sanction follow up are controlled by the staff working at the branch. Other is non-branch delivery based model in which a more holistic approach is taken. Banks get into partnerships with other financial institutions and franchisees.

Identifying models for rural lending

1. The most basic requirement is to ensure that the actual producer benefits from a higher return for their produce. At present the market is highly disorganized and the producer is therefore unable to take any advantage. In the current market practice a lot of intermediaries are involved, such as Dalals and Arathias, who just take care of their own interest. And the farmer, who is the producer, gets minimal to sustain him, and most of profit is taken by taken by the middle men.

2. There is a very little support for the farmers to store their produce and take the advantage of an anticipated increase in price for their produce as proper and cheap storage facilities are not available. The farmer has no capacity to wait and get better return in the market. The produce gets disposed off at the depressed prices levels, because everybody sells his produce during the post harvest period.

3. The very primitive condition of the roads coupled with the lack of adequate and cheap transportation facilities, makes it impossible for the farmers to transport their produce directly to the consumers and by-pass the middle men. And also the markets are far off the capacity of farmer that better price, they could get.

In recent times, considerable head way has been made for regulating the marketing of the agricultural commodities through a model called Agricultural Produce Market Committee Act (APMC). Through this a lot of malpractices prevailing in the agriculture commodities market are sought to be removed. A notable feature is the encouragement provided for public-private partnership inn developing and managing the agricultural commodity market.

Large integrated cooperative marketing societies exist, which serve the cause of producers in effectively marketing their produce, such as cotton, sugarcane, potato, tobacco and fertilizers.

Advantages of APMC model

1. Storage and grading of commodities are done by APMC.

2. It provides farmers with a better capacity to wait and obtain better prices.

3. Interim finances are made available to farmer’s pending sale of produce thereby enhancing their capacity to wait for better prices.

4. Provides the farmers the ability to move the bulk of their commodity to the market at cheap rate.

5. Helps to even out the imbalances in the market.

6. Farmers are provided with High Yield Variety (HYV) seeds and other agriculture inputs required for increasing the farm production.

CPM (Completely Paralyzing Movement)

Well CPM and left parties have invented a novel method to make the aam aadmi rich, that’s by inventing Bandh, and means closed every activity. So by calling the 12-hour bandh, the CPM brought the city to a standstill. No trade happened; offices closed, schools closed. People couldn’t fly because airport was closed, they couldn’t die ‘cause crematoria were closed, they couldn’t get born ‘cause maternity clinics were closed. What an incredible part on CPM to paralyze the country, thank god they are not in center otherwise I can’t imagine what would be the state of our country. These bandh happened in Bengal, Kerala, Tripura, all ruled by them. Now with bandh applied everything stops, all fuel-guzzling cars, trucks, buses, planes, trains are brought to a halt so there will not be more demand for fuel. So people will stay at their homes and won’t be spending anymore on oil, so there pocket will stay fatter. So by immobilizing ourselves we’ll be rich overnight. But for every non-movement forward (bandh), there is an equal and opposite reaction, it’s called going backwards.

The CPM is master in taking the country backwards, since the start of this UPA government, they are blackmailing, putting enormous pressure on the government in each and every effort to start a social expenditure. Off course, the big nuke deal, they oppose it like they have got there head cut and put in burner. Ronen Sen rightly called them as headless chickens, apart from other politicians. SO what is the fuss ‘bout the nuke deal, its just that this deal is formalized with the USA. so they have to oppose it. It is there 100 year old ideology that they have to oppose everything American. The CPM has been really been mired in their not so applicable ideology. They need to understand that this deal just a win-win deal for India, but the staunch supporters of China will oppose it at all cost. YOU know when India fought against China in 1962, the Left parties supported the Chinese, and today only 2 entities are opposed to this Indo-US deal, they are CPM and China. Now if anybody would call CPM as traitor after reading this, it wouldn’t surprise me. Reiterating that thanks to god, that they are not in power otherwise, I guess India would have been a bankrupt country, in the wake to fulfill the populist measures to falsely lure aam aadmi. Very sooner the next generation will have nothing to proud of our country and ask why CPM, the Chinese agent flourished in India.

URGE TO ROUTE THEM IN THE COMING ELECTION

Financial Institutional Framework in India

Financial institutions play an important role in economic development of a country. These would typically include commercial banks, specialized financial institutions and organized capital markets. Financial needs of a business are both long term and short term. The long term needs are for meeting the capital expenditure, while short term needs are for meeting working capital requirements like for buying raw materials, paying off debtors and so on.

There are different financial institutions which help finance both long term and short term requirements of running a business.

Banking Sector:

Banking framework has been described by me in one of the articles called banking institutional framework in India. But apart from the scheduled commercial banks that I have talked of, there are Regional Rural Banks (RRBs) as well. These were set up in 1975, in order to mobilize rural savings and provide credit and other facilities to small craftsmen, farmers and entrepreneurs.

Insurance Sector:

The insurance companies are major financial intermediaries in the non-banking sector. The life insurance business in India started in 1818. In the year 1956, when the life insurance business was nationalized, there were as many as 245 insurance companies conducting the business. With nationalization of these companies, a single organization was created called Life Insurance Corporation of India (LIC). Today LIC enjoys monopoly situation. In addition, it has been able to mobilize substantial amounts of rural savings.

The business of general insurance was also in the hands of private companies. There were 68 Indian organizations and 45 non-Indian organizations. In November 1972, these organizations were nationalized and General Insurance Corporation (GIC) was created which has four subsidiaries, namely, New India Insurance Assurance Company Ltd., United India Insurance Company Ltd., National Insurance Company Ltd and Oriental Fire and General Insurance Company Ltd.