Nabard bets on mechanisation for farm credit growth

The shortage of farm labour in Punjab and Haryana - also known as the food baskets of India - has propelled the demand of farm equipments, which in turn could boost credit growth, according to a paper prepared by the National Bank for Agriculture and Rural Development (Nabard).

The paper says there was a credit potential of Rs 3,400 crore for the financial year 2013-14 for farm mechanisation, an estimated increase of about 20 per cent over the last financial year.

In the area of farm mechanisation, Haryana and Punjab fall among the top states. Initially, farm mechanisation was a " tractorisation" process, however, the introduction and use of other farm equipment viz. power tillers, bullock/tractor drawn implements, reapers, threshers, zero-till seed cum fertiliser drill, raised bed planters, rotavators, etc have also increased significantly over the year, pushing up credit.

According to the paper, the credit potential for the financial year 2013-14 has been estimated under farm mechanisation at Rs 1,990.74 crore for Punjab. For Haryana, it is Rs 1,412 crore.

A Nabard official said that with limitation in available labour and increasing wages, medium and large farmers are looking for labour saving devices to remain competitive. The policymakers and social scientists are looking for mechanisation to remove drudgery from farm operations so that the rural educated youth do not run to urban areas in pursuit of jobs, which are already in short supply. The emerging scenario in the two states manifests the need of modern and efficient farm equipments customised to the need of the farmers and need to conserve resources.

He further added that keeping in view of the use of the new farm machinery other than tractors, the replacement demand and increasing off farm use, the scope exists for credit flow under this important sector. The future policy is expected to focus more on specialized port harvest equipment and machines which will replace in reducing the crop loss, value addition to agriculture produce. Considering the centre government focus on diversification of agriculture from cereal based to horticulture and other high value commercial crops, demand for new farm machinery is likely to emerge in these areas.

Also, Farm mechanization has been promoted vigorously by the central and state governments. Various farm implements have been included in addition to existing implements for financing by banks which includes Multi-crop thresher, Sadd drill, Rotavator Bed Planter, Tractor Mounted Sprayer, Potato Digger(Manual and Automatic), caster thresher, Sugarcane cutter, Planter etc. The state governments provides subsidy on the purchase of the machines by the farmers which can go upto 50 per cent depending upon the machine.

In order to promote mechanization, Nabard has asked Banks may encourage the proposals for custom hiring centres/farm machinery banks in their work plan.