The Agrarian Crisis and Role of Regional Rural Banks

The Indian agrarian economy, long considered the backbone of our nation, is enduring an unprecedented crisis. This turmoil, deeply rooted in the neo-liberal economic policies introduced in 1991, has worsened over the past decade due to misguided priorities, corporate-centric policies, and the neglect of peasant agriculture. Regional Rural Banks (RRBs) and cooperatives, established to support rural India, must now rise to counter these challenges.

The Widening Crisis in Agriculture

Since 2014, data from institutions like the Labour Bureau, NABARD, and RBI has laid bare the extent of the distress. Real wages for rural workers have declined by 0.4% annually, and agricultural workers’ wages have risen by a paltry 0.5% per year. Meanwhile, suicides among farmers continue unabated, with governments at both central and state levels adopting a denial approach.

NABARD's Financial Inclusion Survey (2021-22) revealed that rural households struggle to make ends meet, with an average monthly income of ₹12,698 barely exceeding their consumption expenditure of ₹11,262. The resultant surplus of ₹1,436 per month is alarmingly low, especially in states like West Bengal and Uttar Pradesh, where surpluses hover below ₹1,000.

Challenges in Financial Inclusion

Despite the rhetoric around financial inclusion, rural India remains on the margins. NABARD’s surveys reveal dismal penetration levels:

• Crop insurance: 10% coverage.
• Kisan Credit Cards: 44% penetration.
• Mobile banking: Only 3.1%.

The growing dominance of commercial banks in agricultural credit has exacerbated the crisis. With 79% of total agricultural loans being disbursed by commercial banks, funds are increasingly channeled toward corporates rather than small farmers. RRBs and cooperatives, which are traditionally more farmer-friendly, contribute only 12% and 9%, respectively, to agricultural credit.

RRBs and NABARD Under Strain

RRBs and NABARD, designed to empower rural communities, are grappling with systemic challenges. NABARD’s capacity to support RRBs and cooperatives has been undermined due to the withdrawal of low-cost contributions from the RBI. If the RBI were to reinstate its surplus contributions to NABARD, more than ₹22,000–24,000 crore annually could be directed toward rural development at lower interest rates.

West Bengal exemplifies the weakening of RRBs and cooperatives. Here, RRBs disbursed only 9% of agricultural credit in 2022-23, compared to 12% nationally. Meanwhile, the menace of microfinance institutions (MFIs) in Jharkhand, Assam and West Bengal has grown significantly, exploiting the void left by weakened public financial institutions and raising serious concerns with their unchecked practices.

The Role of Trade Unions in Defending Rural Banking

Trade unions (TUs) like AIRRBEA must stand as the first line of defense against neo-liberal policies that threaten social banking. TUs have a long history of resisting exploitation and advocating for regularization of daily wage workers, fair recruitment policies, and equitable credit distribution.

Digitalization, while promising efficiency, poses new challenges. Extended work hours under the guise of flexibility deepen inequality and exploit the labour force. This has prompted unions worldwide to push for reduced workweeks to counter exploitation.

Collectivism: The Heart of Human Civilization

As trade unions, we must preserve the spirit of collectivism—a fundamental value of human civilization. The story of a broken femur healed with compassion, as noted by anthropologist Margaret Mead, underscores the essence of collective care that distinguishes humanity from the animal kingdom.

Rabindranath Tagore’s Raktakarabi (Red Oleander), the unique drama stepping into 100 years of its first publication in 1926 offers another lesson. The drama’s protagonist, Nandini, symbolizes the power of resistance against exploitation. Even in her death, she becomes a force to dismantle systems of oppression, reminding us that collective struggles are enduring and transformative.

The Path Forward

The agrarian crisis underscores the urgent need for strengthened rural banking and collective action, emphasizing the formation of a National Rural Bank of India (NRBI) through the amalgamation of RRBs into a robust public sector financial framework.

It can be supported by strong trade unions, and must reclaim their role as instruments of financial inclusion and rural empowerment. Together, we can challenge the forces of neo-liberalism and ensure a future rooted in equity and solidarity. As we reflect on the challenges before us, let us remember that trade unions are more than just protectors of worker rights—they are the custodians of humanity’s collective spirit.

[ The author is the General Secretary of All India NABARD Employees Association (AINBEA).]