Bringing all farm inputs under one roof is sensible: Harsh Kumar Bhanwala

Interview with chairman of the Nabard

The transfer of short-term crop loans from the finance ministry to the department of agriculture has invited much criticism on the grounds that it has needlessly bloated the annual budget. In an interview, Harsh Kumar Bhanwala, chairman of the National Bank for Agriculture and Rural Development (Nabard), told Sanjeeb Mukherjee that the move will help foster close linkage between farm credit and components that help in agricultural development. Nabard refinances 37 to 40 per cent of the short-term crop loans disbursed through credit co-operative banks. Edited excerpts

There has been a lot of talk about the allocation for interest subvention on short-term crop loans getting transferred from the finance ministry to the agriculture department. How do you, as a stakeholder,  view this move?

To me, this might help in bringing all the inputs required in farming under one roof, and credit is just one of the inputs. This could also help foster close linkages between subvention and other things for which crop loans are availed, and so also subvention on their timely repayment.

The Budget has done a lot for the irrigation sector, including the creation of a long-term fund of Rs 20,000 crore in Nabard. How will the fund function?

The final guidelines will be worked out with the ministry of agriculture, water resources and also NITI Aayog, but as of now what we know is that this fund will be created with the help of Rs 12,500 crore of budgetary support. The rest will come from tax-free bonds, for which we have given a share in the Centre’s entire bond corpus.

The fund will primarily be used to finance up front the 23 high-priority projects that need to be completed in the next one year.

How will making funds available up front help in the completion of projects?

The identified projects won’t have to be dependent on the annual allocation of funds, which will ensure that they are completed on time and there is no lag. These funds will also help create fresh potential and could be used for command area development.

Is Nabard planning to monitor the execution of the irrigation projects?

Yes, we plan to set up a monitoring mechanism similar to the one that is currently available for the Rural Infrastructure Development Fund (RIDF), which also functions under Nabard. RIDF projects are monitored by a high-powered committee at state level, which comprises the secretaries of respective departments and representatives from Nabard. We have completed projects worth more than Rs 10,000 crore under RIDF in 2015-16. Till now, through RIDF, we are funding projects in which the states have a share or that are are funded by states. We can also do the same with projects that are funded by the Centre through the new fund. In a way, this can be a true game changer.