QUESTION 5
GS3
12.5 marks
‘In the villages itself no form of credit organization will be suitable except the cooperative society.’ — All India Rural Credit Survey. Discuss this statement in the background of agricultural finance in India. What constraints and challenges do financial institutions supplying agricultural finance face? How can technology be used to better reach and serve rural clients?
WRITE IN
9 min
200 words
What the examiner wants
Discuss the AIRCS statement on cooperatives, the challenges of rural finance providers, and technology's role.
DiscussExplain the different sides of the issue, use evidence, and finish with a balanced view.
Demand-wise check
- 1Background: AIRCS (1954) found cooperatives weak but endorsed them; led to SBI (1955), later RRBs (1975), NABARD (1982)≈35 words
- 2Present reality: commercial banks dominate; cooperatives weak due to politicisation, poor governance, NPAs; informal lenders persist≈35 words
- 3Challenges: small landholdings, no land records for collateral, high transaction cost, loan waivers, crop risk≈35 words
- 4Technology: digital land records, KCC, mobile banking, credit scoring with satellite data, banking correspondents, PACS computerisation≈35 words
Open in about 30 words and close in about 30.
Answer plan
AIRCS contextEvolution of rural creditChallengesTechnology solutionsConclusion
Where marks usually go
- Not addressing all three parts
- No data from the AIRCS survey
Draw this
- Bar chart: share of rural credit by source (1951 vs today)
Value addition
- ReportAIRCS (1954, Gorwala Committee) found cooperatives supplied about 3% and moneylenders about 70% of rural credit; it said 'cooperation has failed, but cooperation must succeed'.AIRCS, 1954
- SchemeComputerisation of about 63,000 PACS approved in 2022 with an outlay of about Rs 2,516 crore.Ministry of Cooperation, 2022
Next: plan for one minute, write it in 9 minutes, then get it checked.