Why is it in the News?

Union Cooperation Minister Amit Shah Friday said that the Centre has decided to ensure formation of Primary Agricultural Credit Societies (PACS) in every village by 2027.

Context:

• Union Cooperation Minister Amit Shah recently announced the Centre's commitment to establishing Primary Agricultural Credit Societies (PACS) in every village by 2027, introducing 20 new activities to enhance their profitability.
• Emphasizing the significance of computerization in PACS, Shah highlighted its role in fostering development opportunities.
• He also inaugurated the National Cooperative Database and unveiled the 'National Cooperative Database 2023: A Report' to bridge existing gaps through comprehensive analysis.
  • The database initiative progressed through three phases, including mapping approximately 2.64 lakh societies across agriculture, dairy, and fisheries sectors in the first phase.
• Subsequent phases involved data collection from various federations, banks, and mapping of the remaining 8 lakh primary cooperative societies in other sectors.
• The unveiling revealed over 8 lakh registered societies in the country, connecting more than 30 crore citizens.

What are Primary Agricultural Credit Societies (PACS)?

• PACS are grassroots cooperative credit societies, constituting the final tier in a three-tier cooperative credit system led by State Cooperative Banks (SCBs) at the state level.
• SCBs channel credit to District Central Cooperative Banks (DCCBs) operating at the district level, which collaborate with PACS, directly serving farmers.
• PACS operate as cooperative entities, with individual farmers as members and elected office-bearers from within the community. Villages may host multiple PACS.
• These societies extend short-term and medium-term agricultural loans to farmers for various farming activities.

Number of PACS in India:

• Established since 1904, India currently boasts over 1,00,000 PACS nationwide, engaging a significant member base exceeding 13 crore farmers.
• However, operational PACS stand at only 63,000, indicating the need for enhanced functionality and outreach.

Why are PACS Appealing?

• PACS offer crucial last-mile connectivity, ensuring farmers have access to capital at the onset of agricultural activities.
• They streamline credit extension processes, providing farmers with timely financial support with minimal paperwork, unlike traditional banks known for cumbersome procedures.
• PACS simplify paperwork and administrative tasks, offering farmers collective strength and assistance from PACS office-bearers.
• Unlike individual interactions required with commercial banks, PACS enable farmers to navigate loan processes collectively, reducing reliance on intermediaries.

Challenges Faced by PACS:

• Political influences often overshadow financial prudence within PACS, impacting loan recovery.
• Various committees have highlighted systemic issues within the cooperative system, including low member participation, lack of professionalism, inadequate governance, bureaucratic hurdles, and a workforce with aging and disengaged employees.