Context: Recently, Cabinet Committee on Economic Affairs approved computerisation of Primary Agricultural Credit Societies (PACS) for bringing transparency and accountability in their operations.

Primary Agricultural Credit Societies (PACS)

• PACS are the ground-level co-operative society.
• They were established in 1904 when the first Co-operative Credit Societies Act was passed.
• Aim: To provide cheap credit to the farmers to relieve them from the clutches of money lenders.

Functions

• To promote economic interests of the members in accordance with the co-operative principles.
• To provide short- and medium-term loans.
• To promote savings habit among members.
• To supply agricultural inputs like fertilizers, seeds, insecticides and implements.
• To provide marketing facilities for the sale of agricultural produces.
• To supply domestic products requirements such as sugar, kerosene.

Management

• The general body elects a managing committee which consists of five to nine members and elects a President, Secretary and a Treasurer to look after the day – to – day functioning of the society. A
• All the office bearers render honorary service.

Membership

• All agriculturists, agricultural labourers, artisans and small traders in the villages can become members of the society.

Sources of Funds

• Share capital, entrance fee, deposits from members and non-members, reserve fund, and loans borrowed from higher institutions (Central cooperative Banks, Commercial Banks and government) and grants and subsidies from the government are the different sources of funds of the co-operative societies. 

Key features

• The loan is provided by the PACS only to its member only for short and medium-term purposes.
• Loan should be of enabling common interest if all the members of society.
• The PACS area is limited only to the village level to which it belongs and for the benefit of its members.
• The membership of society is given only to those located at the village where the credit society is established.

Significance

• It is the basic unit organized at the village’s grass-root level by giving agricultural, short-term, and medium-term purpose loans to the borrowers and collecting repayments against those loans.
• They act as a link between the country’s higher financial agencies to resolve issues of the members and borrowers.
• They function as mini-banks to provide finance, as well as counters to provide agricultural inputs and consumer goods.
• These societies also provide warehousing services to farmers in order to preserve and store their food grains.

Road Ahead

• The resource-mobilization ‘Capacity of the PACS will improve substantially, if through reorganization and related measures, they are converted into strong and viable units. Then, they should be able to attract both more deposits and more loans from higher financing agencies.
• These more than a century-old institutions deserve another policy push and can occupy a prominent space in the vision of Atmanirbhar Bharat as well as Vocal for Local of the Government of India, as they have the potential to be the building blocks of an Atmanirbhar village economy.