Topic: Issues related to direct and indirect farm subsidies and minimum support prices;
4. To enable small farmers to diversify their crops or improve their income they must have access to credit at reasonable rates of interest. Examine the reasons for low transmissibility of subsidised credit among small and marginal farmers. What are the steps required to rectify this issue? (250 words)
Reference: The Hindu
Why the question:
The agriculture sector’s performance has not been commensurate with the increasing subsidised credit it receives as most of small and marginal farmers are left out of its ambit due to various reasons.
Key Demand of the question:
To examine the reasons as to why small and marginal farmers are unable to receive the benefits of subsidized credits and to suggest solutions to the above issue.
Directive:
Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Structure of the answer:
Introduction:
Begin the answer by highlighting the importance of accessibility to credit for small and marginal famrers.
Body:
In the body, cite relevant stats from the article which captures the low transmissibility of the credit to small and marginal farmers. Also, state despite increased outlay in successive budgets, they credit reached to them remains very low. Write about its impact.
In detail, write the reasons for the low transmissibility – loose definition of agri-credit, misallocation, uneven distribution and diversion of credit for non-agriculture purposes etc. Substantiate these points from relevant facts and figures from the article.
Next, suggest steps that can be taken to address the above mentioned loopholes. Direct income support, streamlining the agri-credit system, leveraging technology, reforming the land leasing framework and creating a national-level agency to build consensus etc.
Conclusion:
Conclude with a way forward.
