Mentor’s comment-

• In the introduction define briefly what Primary Agriculture Credit Societies are.
• In the body discuss briefly the work of PACS. Explain what are the objectives of Primary Agricultural Cooperative Societies (PACS), their current status in India and why should they be recognized as nodal points for the development of hinterlands in the country.
  Discuss the issues and concerns associated with their development and functioning.
• In the conclusion suggest solutions to address the concerns and way forward to empower PACS in true spirit.

Primary Agricultural Credit Societies are the grass root level arms of the short-term co-operative credit structure. PACs deal directly with the rural (agricultural) borrowers, gives those loans and collects repayments of loans given. and also undertake distribution and marketing functions. They occupy a predominant position in the
co-operative credit structure and form its base. It serves as the final link between the ultimate borrowers on the one hand and the higher financing agencies, namely the Scheduled Commercial Banks, and the RBI/NABARD on the other hand.

Functions of Primary Agriculture Credit Society:
● It promotes economic interest of members in accordance with the co-operative principle.
● It provides short term and medium term loans. It promotes savings habits among members.
● It supplies agricultural inputs like fertilizers, seeds, insecticides, and implements. It provides marketing facilities for the sale of agricultural products .
● It supplies domestic products requirements such as sugar, kerosene etc.

Significance of Primary Agriculture Credit Society:
● For the uninitiated, a PACS is the first building block of the century-old cooperative banking system of India.
● PACS can play a colossal role during this time of strife, in bringing farmer communities closer to credit, inputs, market and value addition.
● No commercial bank branch can ever come close to providing the kind of services a Primary Agriculture Credit Society (PACS) can.
● PACS can also play a major role by integrating its warehouse with the physical and financial supply chain of agro-commodities in the upcoming Garmin Agriculture Markets (GrAMs) or large warehouses in the private sector.

Challenges of PACS:
● Just about two decades ago, credit cooperatives covered 69% of the rural credit outlets and their share in rural credit was fairly impressive, at 45% of the total rural credit in the country.
● Of course, they had a lion’s share of 57% in purveying short-term credit for purchase of inputs.
● Today, those glory days are a distant memory, with their share in rural credit at just 12.26% in FY19.
● This continued slide, and just what can be done to set the course straight, has been at the heart of a lot of research within NABARD and RBI.
● Further they are mounted with the historical challenges of financial viability and shortage of qualified human resources.

Way forward:
● A PACS, to really make a difference, will need to first transition from being just a credit society to a multi-service centre (MSC) and turn into a one-stop shop for both goods and services.
● The recent decision by NABARD to develop 35,000 PACS into MSCs in mission-mode is a step in this direction.
● The initiative will enable PACS to support farmers in post-harvest marketing activities and provide ancillary services to its members like creation of storage and processing facilities, custom hiring centers and collective purchase of inputs.
● Though such services are being provided by the cooperatives in a sporadic way, this intervention will help in structuring these services in a sustained and scalable manner, covering a much larger number of PACS.
● Need-based accompanying measures in the form of grants would also be made available to the cooperative banks for capacity building, project management expenses and ICT initiatives, all of which will finally impact the PACS.
● Helping them turn into multi-service societies may just as well be the last chance we have of giving them this chance.

To make all Primary Agricultural Cooperative Society viable and ensure adequate and timely flow of co-operative credit to the rural areas the RBI, in collaboration with State Government’s had been taking a series of steps to strengthen the PACS and to correct regional imbalances in cooperative development. These efforts are being intensified by providing larger funds to weak societies to write off their losses, bad debts and overdue.