Reddy says problem of farmers’ suicides goes beyond credit
Amid concerns over suicides by debt-ridden farmers, RBI governor YV Reddy has said the problem "goes beyond credit" and blamed the lack of risk mitigation mechanisms against natural calamities and other failures like pesticides for the crises.
By PTI |
WASHINGTON: Amid concerns over suicides by debt-ridden farmers, RBI governor YV Reddy has said the problem "goes beyond credit" and blamed the lack of risk mitigation mechanisms against natural calamities and other failures like pesticides for the crises.
Addressing a gathering at the Peterson Institute of International Economics, Reddy said shortage of skilled manpower and absence of modern infrastructure were "the most critical barriers" to the India economy, which expanded by 9.4 per cent last year, and called for urgent education reforms.
He said the issue of credit to the agricultural sector is a "very important one" but would have to be pursued as a larger effort.
"There is need for enhancing but greater credit in agriculture has to be a part of a larger effort," Reddy, who is here for the annual meetings of the World Bank and the International Monetary Fund, said during the interactive session.
"Suicides are occurring in the states where the credit is highest, where the bank credit is highest; and the bank credit is highest where there is commercial agriculture," the Reserve Bank of India chief said.
"Our diagnosis of the problem is that it goes beyond credit. It goes to the issue of Risk Mitigation Mechanism and that has to be addressed. The major issue is the Risk Mitigation Mechanism," Reddy said.
In India, Reddy said, there are not enough risk mitigating mechanisms either against natural calamities or against failures like seeds or pesticides or power supply by the government or water supply. "There are so many uncertainties, there are so many risks,"
Reddy said financial penetration did not mean just credit. "It is transactions and as people are moving in we have to see the whole penetration of the banking system." Bank lending to agriculture is 18 per cent but the RBI chief pointed out and that "in aggregate the rural areas give more deposits and take less money".
In his formal presentation, Reddy argued that India's economy since independence has been on a path of "gradually self-accelerating development accompanied by reasonable stability" and that there has been a noticeable acceleration in the level of confidence and performance of the economy in the 21st century.
While India's demographic profile of India placed it favorably in terms of manpower availability, "emerging talent supply shortages" have become a critical problem, he said.
"The sustained acceleration in the services and the manufacturing activities is leading to incipient pressures on the supply of good quality skilled labor," he said.
Pointing out the impressive performance of star services sector stemmed from the availability of skilled and cheap labour in India, the central bank chief said the country could not afford to lag behind in education reforms to build its talent pool and remain competitive in the global economy.
"Only 10 percent of the relevant age group is getting enrolled into institutions of higher learning in the country as compared with 40 to 50 percent in most developed countries," he said at the conference, adding less than half of the Indian secondary school students pursued college education, he said.
Addressing a gathering at the Peterson Institute of International Economics, Reddy said shortage of skilled manpower and absence of modern infrastructure were "the most critical barriers" to the India economy, which expanded by 9.4 per cent last year, and called for urgent education reforms.
He said the issue of credit to the agricultural sector is a "very important one" but would have to be pursued as a larger effort.
"There is need for enhancing but greater credit in agriculture has to be a part of a larger effort," Reddy, who is here for the annual meetings of the World Bank and the International Monetary Fund, said during the interactive session.
"Suicides are occurring in the states where the credit is highest, where the bank credit is highest; and the bank credit is highest where there is commercial agriculture," the Reserve Bank of India chief said.
"Our diagnosis of the problem is that it goes beyond credit. It goes to the issue of Risk Mitigation Mechanism and that has to be addressed. The major issue is the Risk Mitigation Mechanism," Reddy said.
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In India, Reddy said, there are not enough risk mitigating mechanisms either against natural calamities or against failures like seeds or pesticides or power supply by the government or water supply. "There are so many uncertainties, there are so many risks,"
Reddy said financial penetration did not mean just credit. "It is transactions and as people are moving in we have to see the whole penetration of the banking system." Bank lending to agriculture is 18 per cent but the RBI chief pointed out and that "in aggregate the rural areas give more deposits and take less money".
In his formal presentation, Reddy argued that India's economy since independence has been on a path of "gradually self-accelerating development accompanied by reasonable stability" and that there has been a noticeable acceleration in the level of confidence and performance of the economy in the 21st century.
While India's demographic profile of India placed it favorably in terms of manpower availability, "emerging talent supply shortages" have become a critical problem, he said.
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"The sustained acceleration in the services and the manufacturing activities is leading to incipient pressures on the supply of good quality skilled labor," he said.
Pointing out the impressive performance of star services sector stemmed from the availability of skilled and cheap labour in India, the central bank chief said the country could not afford to lag behind in education reforms to build its talent pool and remain competitive in the global economy.
ADVERTISEMENT
"Only 10 percent of the relevant age group is getting enrolled into institutions of higher learning in the country as compared with 40 to 50 percent in most developed countries," he said at the conference, adding less than half of the Indian secondary school students pursued college education, he said.
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