The Parliamentary Standing Committee on Agriculture, Animal Husbandry, and Food Processing has noted that Rs 1150 crore were allocated for 2023-24 budget, which was reduced to Rs 747 crore at revised estimate stage, but the ministry could utilize only Rs 689 crore. Similarly, Rs 1183 crore were allocated for 2024-25, which was reduced to Rs 750 crore at revised estimate state, but the ministry could spend only Rs 573 crore by February 14, 2025. The Union Budget 2025-26 has allocated Rs 1186 crore, but the record of dismal performance so far has raised concern about how much money would actually be utilized.

The Union Ministry of Cooperation has explained this gap due to the ministry being nascent, lot of new initiatives undertaken in the financial year 2023-24, which were expected to culminate into schemes in the same financial year. However, due to non-approval of some of the proposed schemes and non-usage of funds allocated under running schemes, the funds allocated in these schemes were reduced at the revised estimate stage and subsequently surrendered. For the year 2024-25, the ministry said that it hoped utilizing the rest 24 per cent of the revised estimate by the end of this financial years, that was within one and half month.

The Parliamentary Standing Committee has accepted the explanation as the teething issues for the newly created Union Ministry of Cooperation, but voiced its concern about the underutilization of the funds allocated primarily due to non receipt of proposals for releasing funds, and underutilization of the funds disbursed due to non-readiness of the states and UTs such as non-opening or mapping of SNA accounts etc. The committee hoped that such teething issues arising in the initial phases of shifting to new accounting system would be transient, and the Ministry would be able to fully utilize the funds once the accounting systems are stabilized. The committee has also suggested that the state governments may be persuaded to send the funding proposals for digitization/ computerisations of PACS and strengthening of Cooperatives through IT interventions.

Secretary of the Union Ministry of Cooperation has however informed the Parliamentary Committee during the evidence meeting, that the Ministry would computerize about 80,000 PACS and the working relating to computerization have almost been completed in respect of 70 per cent of PACS and remaining PACS would also be onboard by the end of this year, March 31, 2025. Thereafter, their training would be held for the next two years.

It would be a great boost to PACS and can potentially help 13 crore small and marginal farmers of the country through 1 lakh PACS at present. The government of India has approved a project for computerization of 63,000 functional PACS with total financial outlay of Rs2,516 crore, which entails bringing all the functional PACS onto an ERP (Enterprise Resource Planning) based common national software, linking them with NABARD through State Cooperative Banks (St.CBs) and District Central Cooperative Banks (DCCBs).

The Computerization of PACS will help in improving the operational efficiency of PACS, ensuring speedy disbursal of loans, lowering of transaction costs and increasing transparency. Additionally, it will increase farmers’ trustworthiness in PACS operations. By standardizing procedures and bringing uniformity in business conduct, the implementation of the Common Accounting System (CAS) and Management Information System (MIS) would allow PACS to conduct its operations. It would not only further the financial inclusion but would also strengthen service delivery to farmers, especially the small and marginal ones.

The NABARD has already developed the software, which has various modules as part of Common accounting system, including Banking, External Integration/Interfaces, CBS Integration, Financial accounting and Tax, Administration and Governance, Regulation, etc. Further, it is customizable for State- specific needs to capture data on all functionalities of the PACS, both credit and non-credit including system software with disaster recovery features. This comprehensive ERP software solution covers various aspects, including membership, financial services, deposits, loans, audit, procurement, processing units, PDS, business planning, warehousing, merchandising, borrowings, asset management, etc. with cyber security.

PACS are the lowest level of the Short-Term Cooperative Credit (STCC) structure and play a vital role in the advancement of the rural economy. PACS offer short-term and medium- term credit as well as other services to member farmers, including the distribution of fertilizers, seeds, pesticides, and storage facilities, etc. Currently, PACS are governed by different State Cooperative Societies Acts with varying provisions. Several factors contribute to the decline or non-functionality of PACS, such as organizational weaknesses, inefficient management, inadequate lending resources, and insufficient income from short-term loans to sustain them financially.

In order to improve the viability of PACS and diversify their business activities to transform them into vibrant economic entities at Panchayat/Village level, Model Bye-laws have been framed by the Ministry of Cooperation. These Model Bye-laws have been adopted by 32 States/UTs or their existing by-laws are in line with Model By-laws.

The Model Bye-laws will enable PACS to diversify their business activities by undertaking more than 25 business activities, including dairy, fishery, floriculture, setting up godowns, procurement of foodgrains, fertilizers, seeds, LPG/CNG/Petrol/Diesel distributorship, short-term & long-term credit, custom hiring centres, Fair Price Shops (FPS), community irrigation, Business Correspondent activities, Common Service Centre, etc. Provisions have also been made to make the membership of PACS more inclusive and broad-based, giving adequate representation to women and Scheduled Castes/Schedules Tribes. By adopting Model bye-laws PACS would be able to serve as multi-service centres. Earlier the PACS were only involved in selling fertilizers and pesticides and to provide short-term loan to the farmers.

The Ministry of Cooperation has informed that PACS will be developed as Common Service Centres (CSC) in the rural areas.

Given their deep reach amongst farmers in the country, they can serve as an effective medium to provide more than 300 e-services enlisted on the DigiSeva Portal under the CSC Scheme, to the citizens in their areas of operation, including banking, insurance, investor awareness, legal literacy, Aadhaar enrolment/updation, e-commerce, services related to PAN Card, passport, IRCTC, bus/air tickets, health services, agricultural inputs, etc. (IPA Service)