The co-operative movement in India has made remarkable progress, now numbering more than 600,000 cooperatives and 250 million members, making it one of the largest cooperative movement of the world. Co-operatives have a huge network and unparalleled reach, with 100 per cent coverage in rural areas. They play a pivotal role in the mainstream of Indian economy, particularly in the fields of rural credit, distribution of agricultural inputs, storage, fertilizer, marketing, labour, and housing. At a time when the country calls for inclusive growth as a key factor in removing socio-economic disparities, the cooperatives are the best organization to achieve this objective as they are deeply rooted in the psyche of the people, are participatory by nature, and promote equity.
In Kerala also, the co-operative movement has made deep strides and touched all spheres of life. Though initially started as a credit movement, it has diversified its activities in various socio economic forefronts. At present there are 15285 co-operative societies functioning under the Registrar of Co-operative Societies out of which 11908 are working satisfactorily. Out of these majority are credit co-operatives (3468) and consumer co-operatives (4671) and 1152 are women co-operatives.
In addition, there are marketing, health and SC/ST co-operatives nearly half of which are either dormant or in loss. Details of the various types of co-operative societies are given in Appendix 2.72. The physical achievements of the sector during 2016 is given in Appendix 2.73.
The credit co-operative societies are most vibrant and viable in the State. The Co-operative Credit structure in the state comprises of Short Term Credit and Long Term Credit.
The Short Term Agricultural Credit structures mainly comprises the Kerala State Co-operative Bank (KSCB) at the apex level, 14 District Co-operative Banks (DCB) at the district level 1647 Primary Agricultural Co-operative Societies (PACS) at the bottom level. These co-operatives are basically self-governing institutions with total accountability to the borrower members and in whose management they have a voice. In addition to the three-tire co-operative banking, there are well developed network of Urban Co-operative Banks in the State.
In the long-term credit, Kerala State Co-operative Agriculture and Rural Development Bank (KSCARDB) is at the top and 78 Primary Co-operative Agricultural Rural Development Banks (PCARDB) at the bottom level. KSCARDB is playing an important role in promoting capital formation in agriculture and rural sectors in the State through its long term investment loans. The survival of KSCARDB and affiliated PCARDBs in the long run depends on their ability to raise funds at reasonable cost that permits financing of farmers and other rural sections at affordable interest rates and to offer a complete range of credit and financial services to them.
The efficiency of the co-operative credit movement is due to the Primary Agriculture Credit Societies functioning at the grass root levels. There are 1647 societies functioning in the state with a membership of 2.29 crores. However, during the period under review, the share capital of the societies has come down from 1833 crores to 1497.06 crores. The deposits during the year have increased from 73795 crores to 80190.41 crores while the loans issued has declined from 83308.04 crores to 76007.84 crores. Out of the total loans issued, the share of agriculture loans comes to around 9.70 per cent. Also, one important development is the increase in the medium term and long term loan for agriculture that will help capital formation in a big way. Selected indicators and credit operations of PACS are given in Appendix 2.74 and Appendix 2.75. Table 2.75 shows the performance of the co-operative under vital banking statistics
|Parameter||Unit||Number/Amount||Percentage to total|
|Total Deposits||in crore||67534||15.4|
|Total advances||in crore||45004||15.9|
|Total business||in crore||112539||15.6|
|Priority sector advances||in crore||23115||14.5|
|Agriculture advances||in crore||5893||9.59|
Source: State Level Bankers' Committee
The overall aim of the consumer co-operative is to supply essential commodities at economic prices. These societies act as principal agents in the public distribution system by providing essential and consumer articles to the general public at a reasonable rate, than the rate prevailing in the open market. The organizational set up under the consumer co-operative segment consists of the Kerala State Cooperative Consumer Federation (apex) at the state level with 14 District Wholesale Stores and 643 Primary consumer stores at lower levels. The Kerala State Cooperative Consumer Federation (apex) makes bulk procurements and supplies these to District Wholesale stores, Department stores named Triveni and primary stores. The District whole sale stores and primary stores in turn cater to the needs of the consumer through their own outlets, super markets, and departmental stores.
Triveni super markets is one important segment under consumer co-operatives intending to save the public from the exploitation of middlemen by dealing with wholesale of food and grocery, cosmetics, household and electrical, and textiles. There are 268 Triveni Super markets with 134 mobile Triveni units, 7 floating triveni super stores, 8 Triveni Coffee houses and 1 unit of Triveni noon meal scheme. Triveni notebooks-manufacture and sale of notebooks are other schemes under consumer cooperatives
The Neethi Scheme started as per directions of Government of Kerala in 1997 is being successfully implemented through 1000 odd selected Primary Agricultural credit societies in all the districts of Kerala for the distribution of consumer goods at the lowest prices, especially in rural areas., Neethi medical stores were started for –providing medicines at subsidized rates. Consumerfed procures and distributes medicines at whole sale rates as per the requirement of the Neethi medical stores. At present there are 94 Neethi Medical Stores directly run by Federation in addition to the 600 odd stores run Primary Co-operative Societies.
Nanma stores was started to distribute 10 items of essential commodities at subsidized rates through network of 2180 retail outlets mainly aiming at the extremely poor and downtrodden in the society. Currently there are 751 Nanma stores run by the Consumer fed itself. 1311 of them are run by selected Co-operative Societies and 869 by the Triveni Wing of Federation. Here the items are sold at less than 20 per cent of market rates. Another major project started is to open directly run Nanma Stores in Panchayath and Municipal Wards having no Nanma Stores run by primary societies at present.
Miscellaneous type co-operative societies have been set up in the State mainly for the purpose of socio, economic development and for generation of employment opportunities to the general public as well as post graduate, engineers and technically qualified persons and skilled and unskilled workers. Hospital Co-operative Societies are formed to provide medical aid in rural and urban areas and extend services of qualified medical and paramedical personal, especially in rural areas. It also provides facilities like health care and allied services to its members and public. Societies are permitted to conduct paramedical course. These societies are co-ordinated by their apex institution Kerala co-operative Hospital Federation. .As on March 31, 2016 there are 102 Co-operative Hospitals working under the administrative control of the Registrar of Co-operative Societies. It occupies a prominent place among the medical institutions in the State. Its aim is to provide advanced medical care and treatment to the public at much lesser and affordable costs, compared to other private hospitals. On an average each hospital has 9 departments, 9 Doctors, 31 Paramedical staff and 8 administrative personnel. It also provides facilities of health care and allied services to its members and public. Hospital Societies are permitted to conduct paramedical courses. In this sector NABH Accredited Multi- Disciplinary Super Speciality Co-operative Hospitals like EMS Memorial Co-operative Hospital and Research Centre, Perinthalmanna are functioning with multifarious Departments. Hospital Societies are co-ordinated by their apex institution, ‘Kerala Co-operative Hospital Federation’.
During the year, 2014-15 District Co-operative Banks have issued 23412 Kisan Credit Cards through PACS and the total number of cards issued by the Co-operative Societies comes to 767768 with a total loan outstanding amounting to 2485.32 crores.
Deposit Mobilisation campaigns by co-operative credit institutions continued during the year under report also. During the period under review, the co-operatives could mobilize 7311 crores as against the target of 6000 crores, while in the previous year it was 6232 crores. Year wise target and achievement is given in Appendix 2.76.
National Co-operative Development Corporation or NCDC is a statutory organization established by the Government of India under an Act of Parliament, charged with the function of planning and promoting programmes for the production, processing, marketing, storage, export and imports of agricultural produce and notified commodities and for distribution of agricultural production requisites through co-operatives. National Co-operative Development Corporation has emerged as a developmental and promotional financing institution for the Co-operative sector in the country. NCDC (National Cooperative Development Corporation) has disbursed a cumulative financial assistance of 6273 crore for various cooperative development projects as on March 31, 2016, of which 1563.42 crores is through state government and 4709.93 crores is via direct funding. Also, out of the 1563.42 crores , 1459.46 crores comes under long term loan and only 53.96 crores come under subsidy, 50 crores comes under working capital. Types of NCDC Assistance are shown in Appendix 2.77. During the fiscal 2015-16 Kerala stood 5th in all India standing for disbursement of NCDC’s financial assistance to states. Sanctions and release of NCDC funds to the state of Kerala for 2015-16 was 386.44 crore and 280.26 crores respectively which comes to the tune of 4.56 per cent of the total sanctions and 3.94 per cent of the total releases made by the NCDC country wide. Cumulatively107cooperatives in Kerala were benefitted by NCDC funding through State Govt/Direct funding scheme during 2015-16 either through sanctions/disbursement of funds. Almost all sectors of Agriculture and allied activities including short term agriculture credit, marketing of agriculture produce, distribution of fertilisers and inputs, consumer cooperatives, processing activities, storage/godowns, infrastructure creation, service sector, industrial cooperatives, Labour cooperatives and weaker section programme like Fisheries, SC/ST etc. were covered by NCDC finance in the state during 2015-16.
The Year-Wise amount released by NCDC from 2013-14 to 2015-16 is given inAppendix 2.78, Appendix 2.79 and Appendix 2.80. The interest rate of NCDC loans ranged from 10.40 percent to 12.5 percent in 2014-15. The interest rate of NCDC loan is referred as one of the highest rates reported. Reduction in rate seems to be essential to avail more support from NCDC.
The actual amount budgeted for the sector in the 12th Plan was 400.78 crores . The expenditure for the first four years has been 372.72 crores (121 percent). The year wise outlay and expenditure of the sector during the plan period is given in the Table 2.8. In the first two years of the plan period, the expenditure has been 86 percent. In the third year year( 2014-15), expenditure has been205 percent on account of 106.39 crores received as SDG for share capital distribution to District Co-operative banks. In 2015-16, it is 97 percent. However, for the current year, it is just 24.67 crores, that is, 25.97 percent (as on January 17,2017)
Source: Planspace and Annual Budget Statement *as on January 17,2017.
Table 2.9 shows the major schemes implemented in the 12th Plan. As can be seen from the table, one-fourth of the outlay in the 12th Plan was allocated for credit co-operatives, the expenditure for which has been 77 percent. Miscellaneous co-operatives consisting of hospital, women, educational and SC/ST co-operatives comes next with the second largest share in outlay, however, the expenditure for it has been just above fifty percent. 36.1 crores was allocated for establishing and functioning of Farmer Service Centre (novel scheme of the plan period), the expenditure of which has also been good. Around 20 crores was earmarked for model co-operatives and SC/ST Co-operatives each, however the expenditure has been just average. The expenditure for marketing co-operatives has been poor.
|Sl No:||Name of the scheme||Outlay||Expenditure||per cent|
|1||Assistance to credit Co-operatives||100.99||78.24||77.47|
|3||Assistance to CAPE||38.5||28.43||73.8|
|4||Farmer Service Centre||36.1||31.53||87.5|
|6||Assistance to model co-operatives||20.5||13.6||66.3|
|7||Assistance to SC/St co-operatives||27.8||19.37||69.6|
|8||Assistance to Marketing Co-operatives||17.5||4.25||24.2|
Source: Planspace and Annual Budget Statement
Provision of interest free loans to paddy farmers to encourage paddy cultivation and curtail the falling area under paddy. During the Plan Period 2012-16 an amount of 550.00 lakh was provided for sanctioning interest free loan to paddy farmers as part of the food security project and this scheme is implemented in association with Department of Agriculture and the amount to be utilized to give interest subsidy for providing interest free loans . In addition to the KSCARDB and PCARDBs, the Primary Agricultural Credit Co-operative Societies(PACS) disburse Agricultural loans to the Farmers who are the members of the society. During the year, 2014-15 District Co-operative Banks have issued 23412 Kisan Credit Cards through PACS and the total number of cards issued by the Co-operative Societies comes to 767768 with a total loan outstanding of 2485.32 crore.
Farmer Service Centres: Setting up of Farmer Service Centres to provide need based information and services to farmers relating to credit, planting material, seedlings and machinery is a novel scheme of the plan period. There are 60 Farmers Service Centres (FSC) functioning under the supervision of Co-operative Societies in different block area. In association with Block Panchayath and the Department of Agriculture, Farmers Service Centre acts as a Nodal Agency for providing all assistance to farmers such as supply of seeds, fertilizers, pesticides, modern agricultural equipments like, tractors, tillers, harvesting machines, Soil Testing and Tissue culture lab facilities. They also provide credit literacy to the farmers. In certain Farmers Service Centre, there are 25 expert persons called: Harithasena' providing agricultural service to the farmers at affordable rate. During this period 60 PACS were selected for starting Farmers Service Centres at block level and an amount of 36.1 crores was sanctioned to the said centres. Setting up of soil testing centres to diagnose plant culture problems, to improve its nutritional balance and to conserve energy and money by applying only the right amount of fertilizers. During the plan period an amount of 234.05 lakh provided to 4 societies for starting soil testing centre and tissue culture lab
Construction of Palakkad District Co-operative Hospital and Research Centre: As NCDC scheme an amount of 46.80 Crores was sanctioned to the said Hospital Society for the establishment of a 500 bedded hospital. The total cost of the project was 52 crores. During this plan period an amount of 40.95 crores was released to the society. A balance amount of 5.85 crores is pending for release.
Kollam District Co-operative Hospital Society: For the construction of Cancer Centre Geriatric Centre and Ayurvedha Hospital an amount of 115.8092 Crores was sanctioned to the said Hospital Society by NABARD. The total cost of the project was 136.2461 crores. In 2015, the Government has accorded sanction for 23.16184 crore as mobilising advance to the said society. During this plan period an amount of 12.00 crores was released to the society.
Computerisation of PACs, SCBs/DCBs and installation of core banking and ATM facilities as well as upgradation and acquisition of modern technological devices for effective hassle free functioning of the banking system. A new scheme was introduced in 2013 for providing assistance to PACS/Primary Credit Co-operatives/State Co-operative Bank/District co-operative Banks for Computerisation, Core Banking Solution, Installation of ATM facility and Upgradation of Technology and Acquisition of Modern Technological devices for the functioning of the Banks/Co-operatives. During this plan period an amount of 13.83 crores was sanctioned to 137 Co-operative institutions. During the XIIth Plan period, 284.50 Crores was provided to Consumer Federation for conducting festival markets for distributing consumer goods to common public at subsidized rates.
At the national level, the target for agriculture credit flow was set at 8.5lakh crore in 2015-16 as against 8 lakh crore in 2014-15. The achievement was 8.7 lakh crore for 2015-16 vis-a- vis 7.3 lakh crore in 2013-14. Commercial banks, Regional Rural Banks (RRBs) and cooperative banks disbursed 6.04 lakh crore (provisional), 1.19lakh crore and 1.53 lakh crore, respectively. Thus commercial banks continue to dominate the agriculture credit delivery followed by Co-operative banks and RRBs.
The ratio of agriculture credit to agriculture GDP has been continuously increasing in the country from 10 per cent in 1999-2000 to 38 per cent in 2012-13. However, a matter of concern is the prominent role played by informal sources/non institutional sources of credit. As per the NSSO 70th round survey, non-institutional sources of credit still account for as much as 40 per cent of the agriculture credit in India and money lenders account for 26 per cent. The access to institutional sources of credit has to be enhanced so as to free the farmers from the clutches of moneylenders. Another problem is the falling investment credit which has declined from 55 per cent in 2006-07 to 39 per cent in 2011-12. To address the falling investment credit in the country the GOI had started the Long Term Rural Credit Fund and allocated 15000 crores in 2015-16 compared to 5000 crores in 2014-15. This can be utilised by Co-operative banks and RRBs by drawing much higher refinance from NABARD so as to support long term and medium term loans in the country
In addition to this, credit plays a significant role in the context of Kerala agriculture on account of its specific features namely; predominance of cash crops in the cropping pattern which are highly credit intensive requiring regular doses of capital at regular intervals ,high labour intensive form of cultivation especially hired labour ,highly fragmented size of holdings in the state requiring input intensive form of cultivation warranting sustained infusion of capital, high export intensive crops as well as high rural indebtedness.
In Kerala, the agricultural advances stood at 60,921crore (7.16 per cent of the total agriculture advances in the country) in March 2016 as against 63,849 crore in March 2015. Thus there has been a slight decline in the overall agricultural advances in the state. The share of agricultural advances to total advances stood at 23 per cent. A disaggregated analysis show that commercial banks contributed the largest share (80 per cent) followed by Regional Rural Banks (11 per cent) and Co-operatives (9 per cent)(Table 2.10). Within these agencies, except co-operative banks, all banks have disbursed more than the mandatory 18 per cent of their advances towards agriculture. While nationalised banks have disbursed 59 per cent of their advances, and RRB 28 per cent towards agriculture, for co-operatives it is 16 per cent. However, year on year growth shows that barring RRB and private sector banks all other agencies have shown a decline in advances.
With regard to break up of term loan and crop loan it is seen that the share of term loan is 20 per cent of the total agriculture credit. This is a very heartening fact that after continued decline in term credit for the past decade or so the share of term credit advanced in total credit has picked up .The agency wise break up shows that share of co-operative sector is 8 per cent and that of RRB is 1.37 percent and the rest 90 per cent is contributed by commercial banks .In comparison to the target and achievements of banks it can be seen that the Kerala Gramin Bank has achieved 152 per cent of the target for term loan whereas for the co-operative sector the target is just 47.49 per cent and for commercial banks it is 54.7 per cent.
With regard to the agency wise, sector wise ground level credit flow of term credit, it can be seen that out of the total term credit disbursed of 7395 crores in 2014-15, around 60 per cent was disbursed by commercial banks and 28 per cent by co-operative banks and the rest by RRB. With respect sector wise disbursal, it can be seen that 26 per cent of the term credit was disbursed for plantation and horticulture and 14 per cent was for dairy development and 13 per cent for land development and poultry each.
The Government expenditure as a share of GDP from agriculture in Kerala has been between 3-5 per cent over the last two decades (3.24 per cent in 1990-91 to 4.39 in 2009-10). The share of Gross Fixed Capital (GFCF) as a percentage of agriculture GDP remained much lower than the corresponding all India figures (Kerala 5.3 per cent as against all India figure of 17 per cent in 2009-10). The prospect of increased level of capital formation in agriculture and allied sector of the State is hampered by limited public investment. Further, private investment supported long term capital assets have not been up to the desired level. This phenomenon of reduced capital formation in agriculture in the State is a matter of concern. Concerted efforts to step up investments in agriculture, both private and public sector, needs to be undertaken to address the issue.
Kisan Credit Card is an effective credit delivery tool for providing hassle-free timely and adequate credit. As per the reports available with the Convenor SLBC, 503163 Kisan Credit Cards with an amount of 7564.53 crore have been issued during the year 2014-15 by the banking sector in the State. The revised KCC norms also provides for inclusion of incidental requirements of the farmers and his consumption expenses. Banks are also expected to leverage their core banking scheme (CBS) platforms to provide value added services to farmers like ATMs, anywhere banking, and debit cards .
NABARD, Kerala disbursed financial assistance of 5820 crore in the State during the year 2015-16. Of the above, 5090 crore was disbursed as refinance to banks, 600 crore to State Government under Rural Infrastructure Development Fund (RIDF), 115 crore as direct assistance to Cooperative Banks and 15 crore as grant assistance from dedicated funds to various agencies for various developmental and promotional activities. Out of the 5090 crores disbursed as refinance, 2390 crore was for long term investment credit and 2700 crore was towards short term assistance to banks. The refinance for long term agriculture investment of cooperative banks was resumed in the current year after a gap of 10 years. Under RIDF new projects worth 710 crore was sanctioned to State Government during the year.
Under the grant component, 2.20 crore was released out of the Cooperative Development Fund to cooperative banks for helping them set up basic infrastructure and training and 1.90 crore was released out of Financial Inclusion Fund (FIF) to cooperative banks, commercial banks and Regional Rural Bank for financial literacy initiatives and technology upgradation. 7.85 crore was disbursed under the Tribal Development Fund for the 12 ongoing tribal projects in four districts and 4 Crore under UPNRM. Further an amount of 1.25 crore was disbursed under the Farm Sector Promotion Fund to Agriculture and Veterinary Universities, KVKs and NGOs for implementing farm projects involving transfer of technology and innovative practices.
In Kerala, the cumulative sanction and disbursement as on March 31, 2016 was 8174.29 crores and 3795.95 crores respectively. During the XXI tranche an amount of 709.76 crores was sanctioned and 116.04 crores was disbursed. The tranche wise sanction and disbursement under RIDF are shown in Appendix 2.84.
Under RIDF XXI tranche - 2015-16, a loan of 710 crore was sanctioned to Government of Kerala for 252 infrastructure projects related with agriculture and rural development. Of the above, 50 per cent projects were for the agricultural sector, 26 per cent for Social Sector and the balance 24 per cent related to rural connectivity sector. The notable projects sanctioned during the year included Groyns for anti-sea erosion works in Alappuzha district, Info-park ( Second phase) infrastructure works in Ernakulum district, Fisheries hatcheries and other infrastructure works for Kerala University for Fisheries and Ocean Studies (KUFOS) in Ernakulum district, Upper Kallar Small Hydro Electric (SHE) Project of 2.0 MW in Idukki district, Salt water Exclusion Regulator cum bridge in Kasargod district, Watershed development projects in 11 districts, road and bridge projects of PWD, HADA, LSGD, in various districts, Solar Power Project(500kWp Grid Tied Floating Solar -Photovoltaic System ) in Wayanad district, Projects related with construction of medical college and district hospitals in Wayanad district Hence, a total of 6060 projects with a total RIDF loan of 8174 crore have been extended to State Government since inception (since 1995 -96). An amount of 593.99 crore was disbursed during the year for ongoing projects. The total disbursements to State under RIDF since inception is 4299 crore.
In Kerala, the total refinance disbursement from NABARD was 78074 crores in 2015-16 as against 1731.5 crores during 2014-15 .Contrary to previous years, KSCARDB accounted for the highest share of 93.15 per cent in the total refinance disbursed in the state in 2014-15, as against commercial banks which accounted for the highest share in 2013-14. This was followed by RRBs (2.89 per cent ) and finally by Commercial banks (0.56 per cent ) in 2015-16.. Agency wise and purpose wise disbursement of refinance assistance by NABARD in Kerala is given in Appendix 2.81, Appendix 2.82 and Appendix 2.83
The purpose-wise analysis of the refinance by NABARD in 2014-15 reveals that, the major share of assistance was availed by non-farm sector (75.94 per cent ) followed by land development(7.12 per cent ) and plantation and horticulture sector (5.85). Other major schemes availed refinance support was minor irrigation, SHGs and land development, and dairy Development . The sectors like fisheries and poultry, which are very important in the rural economy of Kerala, were neglected since 2012-13 from the disbursement of refinance by NABARD.
The project from Kerala under the National Adaptation Fund for Climate Change (NAFCC) titled “Promotion of Integrated Farming System of Kaipad and Pokkali in Coastal Wetlands of Kerala” with a budget of 25 crore has been approved by National Steering Committee on Climate Change (NSCCC). The project envisions integrated farming methods as climate smart practices to enhance resilience of aquaculture communities to climate change especially sea-level rise that results in severe intrusion of salinity. The proposed area of the project is 600 hectares (300 hectares in Kannur District and 300 hectares in Ernakulam, Thrissur and Alappuzha districts). The proposals for coastal sea shore protection and KSEB’s renewable energy concepts are under discussion.