(GIST OF YOJANA) Rural Prosperity Through Warehousing

GIST OF YOJANA : Rural Prosperity Through Warehousing

JUNE-2025

Rural Prosperity Through Warehousing

Context:

India is home to 6.65 lakh villages, with 2.68 lakh Gram Panchayats and rural local bodies, which form the backbone of the nation's rural landscape. These villages, scattered across the country, play a crucial role in shaping India’s rural economy. According to Census 2011, 68.85% of India’s population resides in rural areas, and it is projected by NITI Aayog that it will remain above 50% even in 2045. A significant portion of rural workers (~58.4%) is engaged in agriculture, though the country noticed a decline in the share of agriculture in rural employment since the financial year 1991.

Functions of Warehouse and its Economic Impact

Warehousing is not just providing a storage space. It can help in providing various services to the depositors. Further, the warehouse can provide marking channels to the depositors such as case of warehouses registered with the Warehousing Development and Regulatory Authority (WDRA), which can issue electronic Negotiable Warehouse Receipts (e-NWRs), which can be used for trading on the e-National Agriculture Market (e-NAMJ platform to sell their produce.
Additionally, scientific warehousing helps in reducing post-harvest losses in storage and provides a line of credit to the depositors which can be used to tide over immediate liquidity needs.
Prices of agricultural commodities are subject to volatility owing to various factors like uncontrollable demand and supply, rainfall, internal scenarios etc. However, as per the analysis of the Agmark.net data of the price of paddy (basmati), dry chilli, jeera and turmeric, an upward movement of the price is witnessed if the sale of these commodities is deferred by a few months from the harvesting season.
In general, the deferment of the sale during the harvesting period can fetch higher prices for the farmers. This deferment would be possible only if the farmers store their produce in warehouses.

Challenges in the agricultural warehousing

As per NABARD’s research study on the 'Assessing the State of Affairs in Indian Agriculture with a Focus on Credit & Insurance and Storage & Marketing’, there is a mismatch between production and storage capacity. This poses a significant challenge for the Indian agriculture sector.
The total installed agri warehousing capacity is 239.70 Million MTs as of 31 March 2024 against the production of 328.85 Million MTs of food grains in the same period. Overall, the increase in food grain production is yet to be matched by a corresponding growth in warehousing capacity in India, which poses a substantial constraint to the agricultural sector.
Efforts to improve storage infrastructure and encourage private sector participation in warehousing development are necessary to address this issue and support the growth and sustainability of the agriculture sector in India.
India’s distribution of warehousing capacity is highly skewed across states, and within states there is high variability among the districts. Most of the states in the south and the Gangetic belt are underserved. The Gangetic belt is a major region for a period of cereals, pulses, and oilseeds, & poor growth in warehouses in this region would undoubtedly affect the value chain.
The warehousing capacity is skewed heavily towards warehouses with a capacity of less than 5000 tonnes. On further analysis of data compiled by NABARD, it is observed that over 35000 warehouses out of 51307 warehouses (60%) are of capacity smaller than 500 tonnes, thus echoing the findings from the WDRA study of 2016. The small size of the warehouses constrains professional management of warehouses, resulting in quality losses

Government Initiatives to Address the Challenges

Government has taken several initiatives on the construction of warehouses to augment warehousing capacity in those areas. Some of these initiatives are agricultural marketing infrastructure, the Private Entrepreneurs Guarantee (PEG) scheme through PPP mode, the construction of silos in PPP (Public-Private Partnership) mode and the Warehousing Infrastructure Fund.
GoI launched the Agriculture Infrastructure Fund scheme to create Rs 1 lakh crore Agri Infrastructure. The Agriculture Infrastructure Fund (AIF) scheme provides long-term financial assistance for building post-harvest infrastructure. A world's largest grain storage plan in cooperative sector, godowns at Primary Agricultural Credit Societies (PACS) level were also launched with an outlay of Rs 1 lakh crore. These initiatives can boost the availability of the warehousing space as a whole, in particular at the farm-gate level.
Credit Guarantee Scheme for eNWR-based Pledge Finance (CGS-NPF) was launched with an outlay of Rs 1000 crores to provide guarantees to the banks for the loans issued against e-NWRs. This scheme focused on small and marginal farmers with higher guarantee coverage and lower guarantee fees. This scheme encourages banks to issue more loans on the e-NWRs so that unserved or underserved fanners can get loans from the banks, which can help in deferring the sale of produce.
A digital portal called e-Kisan Upaj Nidhi was launched to reduce the time required by the farmers in getting loans from the banks. This portal is integrated with the various databases like credit bureaus, banks, etc to provide in-principle loan approval to the applicants. This portal also provides a wider choice to the farmers in selecting the bank of their choice.
GoI is extending interest subvention at the rate of l,so/0 (presently) to the loans extended by banks against e-NWRs for small and marginal farmers having KCC accounts. This can reduce the financial burden on the farmers availing of the said loans.

Conclusion:

A policy with a multi-pronged approach to be formulated to increase awareness in rural India to take the benefits of the various government schemes and to take informed decisions on sale of the harvest at the right price.