Primary Agricultural Credit Societies (PACS)

                   Primary Agricultural Credit Societies (PACS)    

Why in News- On the 102nd International Day of Cooperatives, Union Home and Cooperative Minister Amit Shah stressed the urgent need to establish Primary Agricultural Credit Societies (PACS) in every village and block of India. The initiative aims to strengthen the cooperative sector and ensure economic development at the grassroots level. 

UPSC Syllabus:

Prelims: Economic and Social Development 

Mains: GS-II, GS-III: Government Policies and Interventions; Development Processes and Development Industries, Economic Development

What are Primary Agricultural Credit Societies (PACS)?

• Primary Agricultural Credit Societies (PACS) are village-level cooperative credit societies that form the foundation of the three-tier cooperative credit structure in India.

• At the state level, the structure is headed by State Cooperative Banks (SCBs), followed by District Central Cooperative Banks (DCCBs) at the district level.

• Primary Agricultural Credit Societies (PACS) work at the grassroots level, directly interacting with farmers and providing them with the necessary credit facilities.

• These societies are co-operative bodies where individual farmers are members, and office bearers are elected from within them.

• Primary Agricultural Credit Societies (PACS) provide short-term and medium-term loans to farmers for various agricultural and allied activities.

• Societies are owned and managed by members, who are usually local farmers.

Constitutional Provisions   

Constitutional Provisions Relating to Co-operative Societies The Constitution (97th Amendment) Act, 2011 added Part IXB to the Indian Constitution, which deals with co-operative societies.  

The objective of the Amendment

• To empower co-operative societies with greater autonomy.

• To enhance democratic functioning and professional management.

• To improve accountability and transparency within co-operative societies.

• Growth of the Cooperative Sector in India The cooperative movement in India began in the early 20th century with the primary objective of providing credit to farmers.

• Over the years, the movement has expanded to include various sectors such as dairy, housing, banking, and others.

Historical Events 1904: The Cooperative Credit Societies Act was enacted. 1912: The Cooperative Societies Act expanded the scope of cooperative societies. 1950: The National Dairy Development Board (NDDB) and Operation Flood program boosted the dairy cooperative movement. 2011: The 97th Constitutional Amendment Act was passed to strengthen cooperative societies.

 

Key announcements made by Union Home & Cooperation Minister

Establishment of Primary Agricultural Credit Societies (PACS) and Dairies

• The Cooperation Minister announced a landmark drive to establish 2 lakh dairies and Primary Agricultural Credit Societies (PACS) in 2 lakh Gram Panchayats where such facilities are not currently available.

• The initiative is part of a broader strategy to boost the cooperative sector and ensure that no village remains without Primary Agricultural Credit Societies.

Use of Cooperative Banks

• The Cooperation Minister urged all cooperative societies to open bank accounts in local District and State Cooperative Banks.

• The move is aimed at enhancing the financial stability of cooperatives and promoting local economic growth.

National Bank for Agriculture and Rural Development (NABARD  National Bank for Agriculture and Rural Development (NABARD) is India’s apex development bank that focuses on agriculture and rural development. • It was established in 1982 to provide credit and other facilities for the promotion and development of agriculture, small-scale industries, cottage and village industries, and other rural crafts. • To refinance financial institutions lending to the rural sector. • To monitor cooperative banks and regional rural banks (RRBs). • To promote financial inclusion and innovation in the rural credit system.

 

Union Ministry of Cooperation 

• The Union Ministry of Cooperation was established in 2021 by the Government of India.  

• Its main vision is to strengthen the cooperative movement and realize the vision of ‘Sahkar se Samriddhi’.  

• The main objective of this ministry is to provide administrative, legal, and policy framework for cooperative institutions, to help these institutions work with autonomy and professional management.

Objectives and Functions 

The following are the major objectives of the Union Ministry of Cooperation:

Strengthening cooperatives: Promoting autonomy, transparency, and professional management of cooperatives. 

Policy support: Formulation and implementation of appropriate policies for cooperatives.

Education and training: Organizing education and training programs for members and managers of cooperatives.

Financial assistance: Providing financial assistance and subsidies to cooperatives.

Digitalization: Improving the efficiency and transparency of cooperatives through their digitalization. 

Development of cooperative movement

The cooperative movement in India began in the early 20th century.

Its main objectives were as follows:

Agriculture and rural development: Providing loans to small and marginal farmers at affordable rates

Self-reliance: Increasing employment opportunities in rural areas and promoting self-reliance.

Social integration: Promoting social and economic integration in rural communities.  

The role of primary agricultural credit societies (PACS) Importance

Primary Agricultural Credit Societies (PACS) are important for the rural economy as they provide credit to farmers, enabling them to invest in agriculture and related activities. 

The importance of Primary Agricultural Credit Societies (PACS) includes:

Financial Inclusion: Primary Agricultural Credit Societies (PACS) provide credit to small and marginal farmers who may not have access to traditional banking facilities. This promotes financial inclusion at the grassroots level. 

Agricultural Development: By providing timely and adequate credit, Primary Agricultural Credit Societies (PACS) help improve agricultural productivity and income levels of farmers.

Local Economic Development: Primary Agricultural Credit Societies (PACS) contribute to the economic development of rural areas by facilitating the flow of credit and promoting local enterprises. 

Support for the Cooperative Movement: As the basic units of the cooperative credit structure, primary agricultural credit societies (PACS) play a vital role in the success of the cooperative movement in India.

Issues and Challenges of Primary Agricultural Credit Societies (PACS)

Despite their importance, primary agricultural credit societies (PACS) face several issues and challenges:

Inadequate financial resources: Many primary agricultural credit societies (PACS) suffer from a lack of financial resources, which limits their ability to provide adequate credit to farmers. 

Poor Management: Inadequate training and lack of professional management often result in inefficient operations of primary agricultural credit societies (PACS).

Political interference: Political influence can hinder the democratic functioning and decision-making process within primary agricultural credit societies (PACS).

Technological limitations: Limited adoption of modern technology hampers the operational efficiency and service delivery of Primary Agricultural Credit Societies (PACS).

Regulatory challenges: Compliance with various regulatory requirements can be cumbersome for Primary Agricultural Credit Societies (PACS), especially in rural areas.

Initiatives taken by the Government to promote Primary Agricultural Credit Societies (PACS)

Several initiatives have been taken to promote and strengthen Primary Agricultural Credit Societies (PACS) in India:

Financial assistance: NABARD provides financial assistance and refinances to Primary Agricultural Credit Societies (PACS) to enhance their lending capacity.

Capacity building: Training programs and workshops are organized to improve the managerial skills and operational efficiency of Primary Agricultural Credit Societies (PACS).

Digitization: Efforts are being made to digitize PACS to improve transparency, efficiency, and service delivery. The e-Shakti initiative by NABARD is an important step in this direction.

Policy Reforms: The government has initiated various policy measures to strengthen the cooperative sector, including the 97th Constitutional Amendment Act, which aims to enhance the autonomy and democratic functioning of cooperative societies. 

Integration with other schemes: Primary Agricultural Credit Societies (PACS) are being integrated with various government schemes to ensure a comprehensive approach to rural development.