New Credit Guarantee Scheme for Farmers
The Indian government has launched a new initiative aimed at improving the financial stability of farmers. The Union Minister of Consumer Affairs, Food and Public Distribution, Shri Pralhad Joshi, introduced the Credit Guarantee Scheme for e-NWR based Pledge Financing (CGS-NPF). This scheme allocates a substantial corpus of Rs 1,000 crore to provide post-harvest finance for farmers. The funding is available against electronic negotiable warehouse receipts (e-NWRs) after farmers deposit their commodities in accredited warehouses. This initiative is designed to alleviate the financial burdens faced by farmers, particularly during challenging market conditions.
Aiming to Reduce Distress Selling
The primary goal of the CGS-NPF is to minimize distress selling among farmers. Distress selling occurs when farmers are forced to sell their produce at lower prices due to immediate financial needs. During the launch, Minister Joshi emphasized the importance of registering all warehouses under the Warehousing Development and Regulatory Authority (WDRA). He urged warehouse developers to construct facilities closer to farmland, making it easier for farmers to access storage and financing options.
The Minister highlighted that electronic registration would play a crucial role in the scheme’s success. By providing a guarantee cover for loans secured against e-NWRs, the scheme aims to instill confidence in bankers. This, in turn, encourages the extension of pledge finance to farmers and traders who store their agricultural and horticultural products in WDRA-registered warehouses. Joshi also shared his experiences, advocating for a more lenient approach from banks when settling loan amounts and other financial matters related to e-NWR receipts.
Government Support for Farmers
During his address, Minister Joshi reiterated the government’s commitment to farmers’ welfare. He pointed out that global fertilizer prices have surged due to ongoing conflicts, yet the Government of India continues to provide urea to farmers at the lowest rates worldwide. This support is part of a broader strategy to ensure that farmers remain financially viable and can invest in their agricultural practices.
Union Minister of State for Consumer Affairs, Food and Public Distribution, Smt. Nimuben Jayantibhai Bambhaniya, echoed these sentiments, stating that the scheme reflects Prime Minister Narendra Modi‘s dedication to farmers’ welfare. Additionally, Union Minister of State Shri B.L. Verma noted that the CGS-NPF addresses both credit and warehouseman risks, thereby enhancing trust between banks and farmers.
Enhancing Access to Finance
The CGS-NPF is expected to significantly improve access to finance for farmers, particularly small and marginal farmers, women, and those from Scheduled Castes (SC), Scheduled Tribes (ST), and Divyangjan (PwD) backgrounds. The scheme offers a minimal guarantee fee, making it more accessible to a broader range of beneficiaries. Loans extended to small and marginal farmers up to Rs. 75 lakhs will have coverage of 80 to 85%, while loans for MSMEs, FPOs, and traders up to Rs. 200 lakhs will have coverage of up to 75%.
Shri Sanjeev Chopra, Secretary of the Department of Food and Public Distribution, emphasized the need for increased attention to term lending in agriculture and post-harvest pledge finance. He expressed hope that the launch of this scheme would boost post-harvest lending to Rs 5.5 lakh crore over the next decade. The recent introduction of the e-Kisan Upaj Nidhi platform aims to streamline lending processes for farmers, reducing the need for repeated visits to banks. Creating awareness about the CGS-NPF scheme and increasing warehouse registrations to 40,000 in the next 1-2 years are also key priorities.
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