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Primary Agricultural Credit Societies (PACS) are village level cooperative credit societies that provide short- and medium-term finance to farmers for various agricultural and farming activities. Since the early 20th century, these societies have been playing an important role in strengthening the cooperative movement in India. PACS are regulated by State governments under Cooperative Societies Act. They are important as they provide easy credit, agricultural inputs to farmers and help in achieving the goal of financial inclusion. However, they face certain issues of inadequate resources, payment defaults and lack of digitalization. Government has taken steps to improve their functioning such as Computerization of PACS, widening their functions, convergence with other schemes among others.
Primary Agricultural Credit Societies (PACS) are village level cooperative credit societies that provide short- and medium-term finance to farmers for various agricultural and farming activities. PACS are regulated by State governments under Cooperative Societies Act.
The first PACS was established in Karmath, a village in the state of Maharashtra, in 1904.
The main functions of PACS include providing short-term credit to farmers for agricultural activities, providing deposit and savings facilities to its members, disbursing subsidies and grants related to agricultural development, providing agricultural inputs like seeds, fertilizers, and pesticides and acting as a link between the farmers and higher credit institutions like District Central Cooperative Banks (DCCBs).
Primary Agricultural Credit Societies have formed the basis of India's cooperative movement. The first Primary Agricultural Credit Society was established in 1904. Since that time, PACS have been significant in helping farmers access short- and medium-term finance. Until the 1970s, such societies remained the sole institution-based credit agency accessible to rural residents. In July 2021, the Ministry of Cooperation was created to facilitate cooperative societies.
Primary Agricultural Credit Societies (PACS) represent the grassroot level arms of the short-term cooperative structure and they deal directly with rural agricultural borrowers at village level. They serve as the link between ultimate borrowers on one hand and financing agencies at higher levels such as Scheduled Commercial Banks and NABARD on the other hand. As per NABARD's annual report of 2021-22, around 60% of beneficiaries of PACS are small and marginal farmers. PACS encourage various income generating activities through supply of requisite inputs and services.
To realize the vision of "Sahkar se Samriddhi" (Prosperity through Cooperation), Primary Agricultural Credit Societies need to be made more efficient, financially sustainable and accessible to farmers. Government has taken undertaken several initiatives to strengthen & deepen the cooperative movement from Primary to Apex level Cooperatives in the country. All these initiatives will aim to improve the overall state of agriculture, uplift rural communities and promote inclusive economic growth. There is need for continuous efforts to enhance the viability of PACS and contribute to sustainable rural and agricultural development.
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