The Hindu Business Line : TN: Package on the anvil to shore up co-op banks

Addressing the State-level credit seminar organised by the National Bank for Agriculture and Rural Development (Nabard) here today, the Finance Secretary, Mr N. Narayanan, said that the financial weakness of the district level co-operative banks need to be addressed.

While assuring measures to rehabilitate them, the Government would discuss with Nabard and announce a support package, including recapitalisation, and measures to restructure them. These banks need to bring down the interest rates on loans to farmers, he said.

While Nabard has estimated the credit requirement under the priority sector in 2004-05 at Rs 18,258 crore, the banks are likely to extend over Rs 15,133 crore leaving a gap of Rs 3,125 crore.

For agriculture development, investments and credit are key issues. Some of the commercial banks have fallen short of their priority sector lending commitment, which specifies that 40 per cent of their credit should be to this sector, he said.

While the Government is looking at various aspects of agriculture development, irrigation will receive extra attention since it is the basic component that dictates agriculture output.

But with surface water fully exploited and ground water a cause for concern, efficiency of water use will be increased through micro irrigation. Drip and sprinkler irrigation systems will be encouraged in farmlands where pump sets are available. This will make water go "the extra mile" and expand the area under assured irrigation.

The Agriculture Commissioner, Dr R. Kannan, said that Tamil Nadu has taken up a concerted programme to bring down the area under water intensive crops such as paddy and sugarcane, encourage remunerative horticulture and medicinal crops, and promote contract farming.

The area under paddy has dropped by two lakh hectares in the last two years while maize cultivation has increased to 11 lakh hectares from 8 lakh hectares.

Contract farming of cotton has been encouraged by waiving market cess, providing insurance cover and high quality planting material. Cultivation of medicinal plants such as senna and coleus is also being encouraged with private sector participation, he said.

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