Access to credit by marginal farmers

Access to credit is one of the most common ways of improving farmer’s access to inputs. Credit is necessary for the marginal farmers not only to meet their basic economic needs in present, but also for their future socioeconomic development. Since marketable collateral are not always easily available to poor farmers, the risks of lending the money to the borrower are very high. The credit flow problems are not only affecting rich farmers but also marginal farmers who sell labour in the market. In India more than 70% of small farmers have no access to credit from financial institution, and many are often forced to rely on “extortionate money lenders”. The rural financial system comprises not only of traditional sources within both formal (commercial banks, co-operative) and informal (e.g. rural moneylenders) segments, but also new generation institutions with emphasise on micro finance within the two segments.

Kisan Credit Card(KCC) was started with the view of improving farmers access to credit besides the existing facilities for providing the crop loan, the scope of KCC scheme has been enlarged to include loan for agriculture and allied activities and a reasonable component to meet he consumption needs. The credit delivery mechanism is being simplified and more flexible in the use of Kisan Credit Card. A non-wilful defaulter, tenant farmers, sharecroppers who may have been outside the fold of the various schemes, has been included in this scheme. However for this scheme to be successful, education of both the farmers and also the bank official, about the scheme, is required.

Self Help Group (SHG) is a village based financial intermediate usually composed of between 10-15 local women. Members make small regular savings contributions over a few months until there is enough capital in the group to begin lending. Funds may then be lent back to the members or to others in the village for any purpose. In India, many SHGs are linked to banks for delivery of micro-credits. The group members use collective wisdom and peer-pressure to ensure proper end use of credit and timely repayment. This system eliminates the need for collateral and is closely related to that of lending.

There has been a steady increase in the flow of the institutional credit to agriculture. The agency wise share of the credit flow to agriculture shows that the commercial banks accounted for the major share, followed by co-operatives and regional banks. However, there is a declining trend in the share of co-operative banks in the flow of institutional credit over the years, which is indicative of the need for restructuring and reforming these banks. Security requirement problem can be solved by commercial and co-operative banks by evaluating the incremental income resulting from use of credit. National Bank of Agriculture and Rural Development (NABARD) and commercial banks can play a major role in solving the problem of inadequate loan amount available by using the realistic scale of finance to meet the basic consumption of the poor farmers. There should be a uniform rate of interest applied on the farmers. To meet this purpose NABARD should implement a policy of differential rate of interest which would help the poor farmers since the rate of value addition is positively associated with the land holding. Time lag between application and disbursement of loan amount problem can be overcome by commercial and co-operative banks by reducing the time lag between application and disbursements of the loan. Commercial and co-operative banks should simplify the documentation process to take the transaction cost to the lowest level that has been achieved. Recovery and overview is the biggest problem encountered by financial institutions. To overcome this problem recovery of the loan amount must be done in the period of harvest. Also recovery of the loan amount should be rephrased during severe distress like floods and drought or localized events.

Access to credit is not a panacea for alleviation of poverty. The full potential of credit access lies in increasing the welfare of the marginal farmers. This can only be realized if it comprises adequate investments in hard and soft infrastructure as well as investments in human capital. We can hope that if these amendments are implemented, then it would become easier to access loans which will help farmers break out of the clutches of the moneylenders, increase incomes and improve livelihood.

Poor Quality of Education in Government Schools

According to the ‘Education for All (EFA) Global Monitoring Report 2010’ (UNESCO), India’s rank was 105 among 128 countries. And it continues to figure, along with a lot of African and one or two Asian countries, such as Pakistan and Bangladesh, in the group of countries with a low educational development index(EDI).

In India, that is, as much as 34 percent of the children enrolled in Grade I drop out before reaching Grade V. Children drop out because of unattractiveness of school, economic constraints and lack of a tradition of going to or continuing in schools.

In the rural areas one government school is not there within a 3 km radius. Even in urban areas, there are many slum settlements without access to schools. About 14 percent of the schools have a single classroom each, and single-teacher schools constitute a similar proportion. While the national norm is one teacher for every 40 students in primary schools, 30 percent of the schools have a ratio above this norm. Only 85 percent of the schools in the country have drinking water facilities; 37 percent do not have toilets; only 44 percent have separate toilet facilities for girls. Hardly one-fourth have electricity connection; only 5.7 percent have a computer. Facilities such as separate toilets for girls and boys and clean
drinking water are rare.

One of the main reasons cited for the poor state of government schools is lack of funds. The government invests only 3 percent of GDP, a far less from 6 percent, recommended by the Kothari Commission as early as 1964.

Even where the physical infrastructure is better, teachers in many parts of the country have to deal with huge and multi-grade classes. Teachers are often forced to teach subjects for which they are pedagogically not prepared, with only the barest minimum of basic teaching aids. So, it is not particularly surprising that the quality of education in such circumstances is sub-standard. Schools also compromise on quality; with high rates of teacher absenteeism, unfilled vacancies of teachers, absence of teaching material and shortage of trained, motivated teachers, education becomes a farce in government schools. Not only is the quality of education in these schools abysmal (it is common to find Class V students unable to read or write), but they work for hardly 150 days a year against the stipulated 250 days. This is because, apart from declared holidays, teachers are often assigned other jobs -
Census survey or election work.

The curriculum and teaching methodologies stand obsolete and outdated, with the emphasis being on rote-learning and merely developing reading and writing skills instead of holistic education. Lack of vocational training and non-availability of such courses renders students with barely any employable skills at the end of their schooling.

Clearly, a substantial increase in public spending is a condition for improving the quality of education. A part of money should be utilized for necessary expansion in schooling facilities. We need good quality teachers in sufficient numbers. Professional development programs for Heads of Secondary/Higher Secondary Schools should be started. The objective of schools should be to encourage student to undertake the curriculum enrichment projects in the areas such as Science, Environment, Population Education, Human Rights, Languages, Fine Arts, Music, Folklore, Yoga, Sports activities, etc. Co-curricular activities such as Poster/Painting/Debate/ Elocution/Essay Competitions/ Quiz contest/ Special Interactive Lectures should be organized at the district/sub-divisional/block headquarters. These may be organized while observing World Population/AIDS/Environment/Women Day and other International/National Days/Events.

System in which the schools are owned by the government but managed and operated by
the private sector is a workable alternative. The government could bear the costs of running the institution, with suitable incentives to the private players willing to invest in such a venture (possibly in the form of tax benefits to the private organization); while the management and operation of the school would be in the hands of the private organization/establishment. While this would ensure an exponential increase in the quality of education that is accessible
to the masses, but it may drive up the government’s expenditure on education. However, a public-private partnership in education is the most suitable scenario to check corruption, ensure efficiency and proper utilization of allocated funds. Besides the touching faith in the efficiency of the private sector, there is also the presumption that non-governmental organizations (NGOs) can ensure credibility and accountability.

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