The report submitted to RBI suggested some far-reaching moves — set up of a self-sustaining Rural Credit Guarantee Scheme for making good non-wilful defaults, open up of trading in commodity options and enable banks to act as aggregators so that small and marginal farmers can partake in futures and options trading, and most significantly, enact a new ‘Moneylenders’ Regulation Act’ to protect small farmers from usurious rates of interest. It was also recommended that banks set up financial and technical counselling centres for distressed farmers.

In his annual policy speech this April, RBI Governor Y V Reddy promised that the details of a Credit Guarantee Scheme for distressed farmers will be placed in the public domain by May 31, 2007. But that is yet to happen. Senior RBI officials say that the scheme is still being finalised.

As for the new legislation for moneylenders, the RBI had appointed a technical group under Punjab National Bank Chairman and MD SC Gupta, whose report is expected by June 30.

The recommendations made to the RBI as well as the Planning Commission are largely similar and both stress on the need to attract industries to rural areas to remove excess people from farming and reduce small and marginal farmers’ reliance on farm income alone. Twenty-year tax holidays, capital subsidies and other benefits for clean and green industries have been mooted to lure industry to the countryside along with a mandate to employ at least 80 per cent workers from rural areas.