The Government of India has introduced a ₹1,000 crore Credit Guarantee Scheme (CGS) to support small and marginal farmers facing distress selling. Launched by Union Food and Consumer Affairs Minister Prahlad Joshi, the scheme aims to revolutionize the agricultural credit system and empower farmers with access to post-harvest loans.
Under the scheme, farmers can use electronic negotiable warehouse receipts (e-NWRs) as collateral for obtaining loans from banks. These receipts will be issued by Warehousing Development and Regulatory Authority (WDRA)-registered repositories upon depositing their produce in certified warehouses. This initiative will allow farmers to hold their produce until prices rise instead of selling under duress due to immediate financial needs.
Minister Joshi highlighted that the scheme would address banks’ hesitation in lending to farmers by offering a government-backed credit guarantee. He emphasized that sustainable farming requires economic viability, and this scheme will ensure farmers have access to funds for the next cropping cycle without resorting to distress sales. He also underscored India’s growing role in global food security, noting the need to strengthen domestic agriculture.
The minister pointed out that despite soaring global fertilizer prices due to ongoing conflicts, the government provides urea to farmers at the world’s lowest rates. He further urged banks to adopt a more liberal approach toward facilitating loans and settlement processes for small farmers.
Faiz Ahmad Kidwai, Additional Secretary in the Ministry of Agriculture and Farmers’ Welfare, emphasized the importance of interest subvention schemes to encourage participation among small farmers, as only 2-3% of large farmers currently benefit from such facilities.
Sanjeev Chopra, Secretary, the Department of Food and Public Distribution, revealed that post-harvest lending currently stands at ₹40,000 crore out of the total agricultural lending of ₹21 lakh crore. However, e-NWR-based lending remains limited to ₹4,000 crore, significantly below the estimated ₹5.5 lakh crore potential. He projected that the new scheme would push post-harvest lending to ₹5.5 lakh crore over the next decade, requiring coordinated efforts between the banking and warehousing sectors.
To achieve this, Chopra called for increased warehouse registrations, streamlined pledge financing processes, and raising awareness among farmers. He stressed the need for reasonable repository charges by platforms like the National e-Repository Limited and Countrywide Commodity Repository Limited. Currently, only 5,800 warehouses are registered, leaving considerable room for growth.
