Government launches ₹1,000 crore farm credit scheme

The consumer affairs and food ministry introduced a ₹1,000 crore worth credit-guarantee program for farmers, backed by electronic negotiable receipts.

Why care: the scheme is designed to encourage banks to loan cash to farmers who store their produce in warehouses registered by the government.

With easy credit, GOI expects to help ease cash-flow issues that farmers face post harvest.

Electronic Negotiable Receipts — what are they? These are digital documents that prove ownership of goods, similar to paper receipts, but they can be easily transferred or sold electronically in the commodities market.

In India, Electronic Negotiable Receipts (ENRs) are issued by licensed warehouses under the Warehousing Act of 2007.

Context: nationwide, there’s roughly around 5,500 registered warehouses under the Warehouse Development and Regulatory Authority, which issue ENRs for farmers to utilize.

The fresh credit guarantee scheme also encourages warehouse operators to consider building more warehouse facilities closer to markets where farming density is higher.

Zoom out: agriculture supports the livelihood of over 40% of India’s workforce, and forms 18% of India’s GDP, which is significantly higher than mature markets like the US (10% of workforce, 5% of GDP).