Govt allots Rs 2,516 cr for computerisation of primary agri co-op societies

The model bylaws will enable PACS to offer economic activities other than credit which includes developing cold-storage facilities in villages, running PDS shops and locker facilities for depositors

The Cabinet on Wednesday approved a grant of over Rs 2,516 crore for computerisation of around 63,000 Primary Agriculture Cooperative Societies (PACS). According to top officials, this is part of a gamut of measures that the government intends to take to make PACS economically viable.

The measures also include preparing a set of model bylaws for states to run and manage PACS.

The model bylaws will enable PACS to offer a host of economic activities other than credit. This includes developing cold-storage facilities in villages, running PDS shops and providing locker facilities for rural depositors.

PACS would also act as common service centres for government schemes. This would enable them to work in dairy, fisheries, irrigation and biogas sectors, among others.

Currently, there are 63,000 PACS in the country and the Centre has a target to scale them up to 3 lakh by 2025.

For computerisation and development of software for centralised monitoring of financial transactions, around Rs  4 lakh would be disbursed to each PACS. This will be shared among the Centre, states and NABARD.

“The model bylaws, which are being prepared in consultation with states, will ensure that PACS become viable economic entities and are transparent in their functioning,” a senior official from the newly-created ministry of cooperation said.

At present, PACS fall within the jurisdiction of state governments. Though a crucial part of the rural ecosystem, PACS have been grappling with problems. In fact, many of them have become defunct due to inappropriate financial practices.

“The idea is ensuring that whenever a PACS becomes defunct, it is sent for liquidation. And, a new PACS is created in its place, which is transparent and viable,” the official said.

He said computerisation of the 63,000 PACS, which will commence this fiscal year, will bring transparency in accounting. It would pave the way for them to diversify into other activities smoothly.

“The existing bylaws do not allow PACS to diversify from their core business. The Union cooperation ministry is in the process of drafting a model bylaw to enable them to offer several services,” the official said.

The PACS constitute the lowest tier of the three-tier short-term cooperative credit system in the country, comprising 130 million farmers as members.

They account for 41 per cent (30 million farmers) of the KCC loans given by all entities in the country. Around 95 per cent of these loans (29.5 million farmers) through PACS are to small and marginal farmers.

The government is working on a new cooperation policy, setting up of a university and developing a database of cooperatives.

Meanwhile, reacting to the Cabinet decision, cooperation minister Amit Shah said the move will improve their efficiency. It will enable them to become nodal centres for providing other services like crop insurance, he added.