The government is contemplating a recapitalisation package to improve the economic health of the cooperative credit structure. This would involve some commitments by the state governments and the state cooperative banks, agriculture minister Ajit Singh said at the meeting of the parliamentary consultative committee attached to his ministry.
The package would help cooperative institutions to overcome the basic problems. These included limited ability to mobilise resources, low levels of recovery of loans, high transaction costs, lack of professionalism and flawed interest rates.
The cooperatives have a share of 44 per cent in the rural credit and 31 per cent in rural deposits. The total flow of credit to agriculture and allied sectors has achieved an impressive growth of 20 per cent in 2000-01.
MPs demanded that subsidy delivery mechanism should be suitably amended to ensure that it reached the farmers. At present, the subsidies went to input industries, such as fertiliser industry, they maintained. They also wanted the inputs like power and water to be supplied to farmers at concessional rates.
They suggested that the interest rates on cooperative credit should be reduced to make cheaper loans available to the farmers.
The state and district level cooperative banks should cut down their commissions to facilitate such a reduction in the interest rates.
