KATHMANDU, JULY 23

Financial institutions are seen to be tight-fisted when it comes to agricultural sector. This was stated in the Monetary Policy for Fiscal Year 2022-23 that Nepal Rastra Bank unveiled yesterday.

According to NRB, the financial institutions were required to invest 15 per cent of their investable amount in agriculture sector but they have invested only 12.8 per cent of this amount. 'Import in agriculture has peaked and financial institutions are seen to be parsimonious in investing in this sector. This means dependence on foreign import in agriculture is not going to lessen any time soon,' economist Bhawani Khanal said.

Financial institutions had invested Rs 490 billion 150 million in the agriculture sector by the end of the last fiscal year 2021-22. Investment of this amount means nearly three per cent less than the 15 per cent amount that they are required to invest. The number of farmers taking concessional agricultural loans during that period as of June 14 is 60,618. They took concessional loans amounting to Rs 139 billion 684 million.

The budget for the fiscal year 2022-23 states that a balanced agricultural trade would be maintained in the next five years by means of agriculture transformation. Although it is mentioned in point 18 of the budget document that the import of rice, maize, wheat, vegetables and fruits should be decreased by 30 per cent, the financial institutions are not enthusiastic in investing in agriculture to reduce import.

'There is a large population of small farmers in Nepal,' said Uddhav Adhikari, coordinator of Agriculture Campaign for Food. He said the monetary policy and the budget for fiscal year 2022-23 was not in favour of small farmers.

The monetary policy has a provision by which real agriculture entrepreneurs can take project loan of up to Rs two million for running an agriculture business. However, small farmers are not likely to benefit from this provision.

It is estimated that there are around eight million small farmers in the country. Most of the small scale farmers, who have earlier run projects keeping collateral, have no projects.

Middle-class farmers, who have run projects keeping collateral in the bank, would benefit from this arrangement.

Small scale farmers have fragmented arable land, but land is left uncultivated for lack of timely fertiliser, seeds and irrigation. Though the government had brought a plan to manage fragmented land, it has not been effective.

The budget of the current fiscal has emphasised on production through modernisation, commercialisation and mechanisation of agriculture.

But there is no sign of reduction of dependence on agriculture as arable land is gradually becoming barren, more people are selling arable land as housing plots.

A version of this article appears in the print on July 24, 2022, of The Himalayan Times.