File Photo: RBI Governor Dr Raghuram Rajan. (Reuters)
Cautioning against taking farmer suicides "lightly", RBI Governor Raghuram Rajan today said small and marginal farmers across the country should have access to formal financing.
Speaking within days of a farmer committing suicide at a public rally in Delhi, Dr Rajan said one should neither take it "lightly" nor offer easy explanation as these are "complicated matters".
He also said that lack of formal financing is bigger problem than excessive burden of informal financing.
"The need of the hour is to expand formal institutions to every corner of country. In the last few days, we have seen the tragic picture of farmer suicides...(these) are complicated matters. There is no easy explanation to why somebody takes ultimate step.
"One should neither take it lightly nor offer too easy an explanation. It needs to be studied," Dr Rajan said today while addressing a function.
Following the suicide by Gajendra Singh, a farmer from Rajasthan, in full public view in Delhi, the issue of farmers ending their lives has come to the centrestage.
The incident also rocked Parliament and Prime Minister Narendra Modi had appealed for a collective solution to the "deep-rooted" agrarian crisis.
"...it is lack of formal financing rather than the excessive burden of informal financing which is the problem. So can we move formal financing to every area of the country," he said, adding that Pradhan Mantri Jan-Dhan Yojana was one of the initiatives aimed at providing finance to needy ones.
The RBI Governor further laid emphasis on providing formal finance to small and marginal farmers who really do not have access to it.
"We need to look at whether we have right institutions. Whether we have right incentive in the system," he further said.
On prevalence of Arthiya system in the farm economy, Dr Rajan said the loans given by commission agents could be at very high rates to farmers.
Referring to debt-waiver scheme, he said the loan waiver schemes launched for growers actually "impeded" the credit growth in the system and disrupted the credit culture.
"...in some states where loan waiver takes place, it actually impedes the growth of credit rather than enhancing ...it disrupted the lending rather than increasing lending going forward," he further said.
Asserting that one should "avoid taking simplistic answers" to farm problems, Dr Rajan said the focus should be on raising farm yields, promoting agriculture allied sector and provide opportunities to growers.
There is a need to increase productivity of the agriculture sector, create other opportunities in allied activities like dairy and animal husbandry, Dr Rajan said.
Besides, an emphasis should be laid on "increasing opportunities outside the agriculture sector so people can go part time in other jobs to supplement their income even as agriculture is not so remunerative," he said.
The RBI Governor further said that steps need to be taken with regard to protecting the farm sector from the impact of climate change.
"It (agriculture) is subject to increasing risks (like) climate change...we also need to understand how to protect agriculture better against these kinds of events," he further said.
Referring to 'Make in India' initiative, Dr Rajan said it could be an answer to increase opportunities in and around the agriculture.