The Narendra Modi government has ambitious plans for the Primary Agricultural Credit Societies ranging from computerisation, modernisation of scope, generating employment, and taking the numbers up from about 63,000 that are functional currently to 3,00,000. Sources say though the time frame for sweeping changes for a revamped and robust PACS across the country is by around 2025, the government plans to complete them over the next two years, adding that “though it looks ambitious, it is doable”.
On June 29, the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi approved the computerisation of PACS. Addressing the media, Union Minister for Information and Broadcasting Anurag Thakur said that the move will benefit 13 crore farmers, mainly small and marginal ones. The PACS play a crucial role in the rural economy and have approximately 13 crore farmers as members.
The objective, the government said in a statement, is “increasing efficiency of PACS, bringing transparency and accountability in their operations, facilitating PACS to diversify their business and undertake multiple activities/services”. With a total budget outlay of Rs 2516 crore, the project aims to computerise about 63,000 functional PACS with GoI bearing Rs 1528 crore.
The government has also proposed that PACS and the District Central Cooperative Banks ( DCCBs), as well as the State Cooperative Banks ( StCBs), will be on a common platform and have a common accounting system as currently there is no uniformity in the software adopted by each. Union Home Minister and Minister of Cooperation Amit Shah has said that the software will be made available in local languages.
Government sources said that PACS will be made “viable”, “multidimensional” and will have “new bylaws”, indicating that new model bylaws could be published in a month’s time. Highlighting the humongous scale of the Centre’s plans for the cooperative sector, a top source in the government said, “This is not a project of just Rs 2500 crore. Rs 3.19 lakh crore will be spent by GoI, state governments, and NABARD, of which GoI will bear 75%.” The plan is to have 3 lakh functional and viable PACS in 3 lakh villages across India. The scope of PACS is set to be broadened with more than 20 new options including that of functioning as FPOs.
The Ministry of Cooperation has already slashed the surcharge from 12% to 7% for those cooperative societies with earnings between Rs 1 crore and Rs 10 crore. Similarly, the minimum alternate tax ( MAT) has also been slashed from 18.5% to 15% for cooperative societies to provide them a level playing field with corporates.
Already, on June 1, the union cabinet decided to allow cooperatives to register as “buyers” on the government’s e-marketing platforms, thus enabling cooperatives to procure goods and services from about 40 lakh vendors across the country who are registered on the GeM portal. Furthermore, on June 8, the RBI raised the limit for individual housing loans for cooperatives banks. While for urban cooperative banks for tier 1, the limit has been raised from Rs 30 lakh to Rs 60 lakh, for tier 2, it has been raised from Rs 70 lakh to Rs 1.40 crore. For the rural cooperative banks, the limit for individual housing loans has been raised from Rs 20 lakh and Rs 30 lakh to Rs 50 lakh and Rs 75 lakh, which is more than double.
Secondly, the rural cooperative banks have also been allowed to lend to the commercial real estate residential housing sector and, thirdly, urban cooperative banks have been allowed to provide doorstep banking facilities to their customers, just like commercial banks.
“We have made panchayats our focus, and we will work with the state governments,” a top source within the government said, indicating that dialogue with the states has already begun. The government is aware of the challenges of financial misappropriation that have plagued the cooperative sector and believes that the much-needed transparency, which has been added, will stem the same. Newly created PACS will help in employment generation also, officials say.