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Indian Economic Policy

Notes NABARD has continued to follow the policy earlier laid down by the Reserve Bank in regard to
sanction of medium credit limits for approved agricultural purposes. It also grants longterm credit to
State Governments for contribution to the share capital of co-operative credit institutions.
NABARD provides two types of refinance. The first is extended to RRBs, Apex Rural Credit Institutions,
viz., State Cooperative Banks and State Governments. The second type of refinance is extended to
provide resources for ground level deployment of rural credit.
14.3 Rural or Agricultural Marketing

There are many ways by which the farmer may dispose of his surplus produce. This first and the
most common method is to sell away his surplus produce to the village money-lender-cum-trader,
who may buy it either on his own or as an agent of a bigger merchant of the neighbouring ‘mandi’
town. It is estimated that in the Punjab, 60 per cent of wheat, 70 per cent of oils and 35 per cent of
cotton are sold in the village itself.
The second method adopted by the Indian farmer is to dispose of his produce in the weekly village
markets, known in Hindustani as the ‘hat’. Besides, fairs are held once a year in important villages or
towns in connection with religious festivals. In ‘hats’ and fairs, the farmers bring their produce as
well as livestock and sell them.
The third method of agricultural marketing is through the mandis in small and large towns. The
mandi may be located at a distance of several miles and, therefore, the farmer has to make special
effort to carry his produce to the mandi. In the mandis, there are brokers or ‘dalals’ who help the
farmers to dispose of their produce to till wholesalers known as ‘arhatiyas’. The wholesalers may
dispose of the agricultural produce which they have purchased from the farmers to retailers or flour
mills and processing units. For instance, in the case of cotton, the wholesaler sells to the cotton ginning
factories, and in the case of foodgrains like wheat he sells to the flour mills or to retailer.
Basic Facilities Needed for Agricultural Marketing
In order to have best advantage in marketing of his agricultural produce the farmer should enjoy
certain basic facilities :
(i) He should have proper facilities for storing his goods.
(ii) He should have holding capacity, in the sense, that he should be able to wait for times when he
could get better prices for his produce and not dispose of his stocks immediately after the
harvest when the prices are very low.
(iii) He should have adequate and cheap transport facilities which would enable him to take his
surplus produce to the mandi rather than dispose it of in the village itself to the village money-
lender-cum-merchant at low prices.
(iv) He should have clear information regarding the market conditions as well as about the ruling
prices; otherwise, he may be cheated. There should be organised and regulated markets where
the farmer will not be cheated by the dalals and arhatiyas.
(v) The number of intermediaries should be as small as possible so that the middlemen’s profits
are reduced. This increase the returns to the farmer.
Defects of Agricultural Marketing in India

Judging from these considerations, the position of agricultural marketing in India is still deplorable.
The Indian farmer does not have facilities for storing his produce. The storage facilities which are
available in the village at present are so poor that 10 to 20 per cent of the produce is eaten away by rats.
Secondly, the average farmer is so poor and indebted that he was no capacity to wait for better prices.
He is forced to sell his output to the money-lender or to the trader so as to clear his debts. Such
distress sales weaken the already miserable position of the average Indian farmer further.
Thirdly, the transport conditions in rural areas continue to be bad that even richer farmers, who have
large amounts of surplus, may not be interested ingoing to the mandis. Most roads are kachcha
(unmetalled) and in rainy season they are unusable.

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