Here are the finance facilities available for agriculture and industry, as per the sources:
Finance Facilities for Agriculture
- Cooperative Credit Societies: Cooperative credit societies have been instrumental in providing credit to farmers, especially after India’s independence. These societies offer loans at lower interest rates than moneylenders, aiming to reduce farmer exploitation. ****
- Commercial Banks: Commercial banks, including the State Bank of India Group, also extend credit to farmers through schemes like the “village adoption scheme” and the “service area approach.” They have also supported the establishment of regional rural banks to cater to the needs of small and marginal farmers and rural artisans. ****
- Regional Rural Banks: Regional rural banks (RRBs) are specifically designed to provide credit to small and marginal farmers and rural artisans, aiming to protect them from exploitation by moneylenders. ****
- NABARD: The National Bank for Agricultural and Rural Development (NABARD) plays a crucial role in financing agriculture and rural development. It provides refinance to cooperative banks and RRBs, enabling them to extend credit to farmers. NABARD also implements various schemes, including those for irrigation, soil conservation, and watershed management. ****
- Government Loans (Taccavi Loans): The Indian government provides loans known as taccavi loans during emergencies like famine or flood. These loans carry a low interest rate of 6%, aiming to support farmers during times of distress. ****
- Kisan Credit Card (KCC): Introduced in 1998, the Kisan Credit Card scheme provides short-term formal credit to farmers, both owner cultivators and tenant farmers, at attractive interest rates. The scheme simplifies the application and repayment processes, reducing the burden on farmers. ****
- Investment Loans: Farmers can access loans specifically for investments in areas like irrigation, agricultural mechanization, land development, plantation, horticulture, and post-harvest management. ****
- Interest Subvention Scheme: This scheme aims to make short-term credit more accessible to farmers by offering it at subsidized interest rates. The government provides interest subventions to various lending institutions, including public and private sector banks, cooperative banks, and RRBs, as well as to NABARD for refinancing purposes. ****
Finance Facilities for Industry
- Capital Markets: Capital markets play a vital role in providing investment funds for industrial activities. These markets function in three primary ways: ****
- Mobilization of Savings and Promotion of Investment: They channel savings from individuals and institutions into productive investments.
- Efficient Allocation of Funds: Capital markets help allocate funds to the most promising and efficient industrial ventures.
- Facilitation of Asset Transfer: They enable the transfer of existing assets, both tangible and intangible, promoting liquidity and efficient capital utilization.
- Joint-Stock Companies: Joint-stock companies, with their limited liability and perpetual succession, have played a significant role in promoting industrial activity worldwide. The concept of limited liability encourages investment by reducing individual risk, while perpetual succession ensures business continuity. ****
The sources highlight some of the factors that influence industrial investment: ****
- Limiting Factors: Factors that can hinder investment include:
- Lack of entrepreneurship
- Shortage of skilled labor
- Inadequate infrastructure
- Unfavorable legal and political conditions
- High interest rates
- Government restrictions
- Positive Factors: Factors that encourage investment include:
- Favorable market conditions
- Affordable interest rates
- Protection for investors
- Favorable taxation policies
- Attractive dividend policies
- Industry creditworthiness
- High output and profit levels
- Competitive industry landscape
The sources also mention capacity utilization as a key concern in Indian industries. They indicate that high levels of underutilized capacity can signify a waste of resources, particularly in a capital-scarce economy. ****