Primary Agricultural Credit Societies (PACS)

Context:

Union Home Minister and Minister of Cooperation will inaugurate a day-long mega conclave “Strengthening PACS through FPOs” in New Delhi on July 14, 2023. 

More on News:

• The mega conclave is being organised by the National Cooperative Development Corporation (NCDC) in collaboration with the Union Ministry of Cooperation.
• The conclave is aimed at discussing ways to strengthen Primary Agricultural Credit Societies (PACS) through Farmer Producer Organisations (FPOs).

About Primary Agricultural Credit Societies (PACS):

• PACS are village-level cooperative credit societies.
•  They serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level. 
• The PACS have around 13 crore farmers who are primarily engaged in short-term credit and distribution of seeds, fertilisers, etc.

Functioning of PACS:

• Credit from the SCBs is transferred to the District Central Cooperative Banks, or DCCBs, that operate at the district level. 
• The DCCBs work with PACS, which deal directly with farmers.
• Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them. 

Concern:

• Political Influence: Political compulsions often trump financial discipline, and the recovery of loans is hit.
• Limited Spread in North-East: Though geographically active PACS cover about 90% of 5.8 villages, there are parts of the country, especially in the north-east, where this coverage is very low.
• Inadequate Resources: The resources of the PACS are much too inadequate in relation to the short-and medium-term credit needs of the rural economy.

Significance:

• Last Mile Connectivity: They offer last mile connectivity to farmers in disbursing credit.
• Hassle Free Loans: PACS have the capacity to extend credit with minimal paperwork within a short time.

News Source: PIB