NABARD, HO, Mumbai

1. Incentivising investments for restoration of degraded lands in rainfed areas by financial institutions NABARD, HO, Mumbai

2. Corporate Mission of NABARD Promote sustainable & equitable agriculture & rural development through participative financial and non-financial interventions, innovations, technology and institutional development for securing prosperity.

3. Major challenges in Rainfed Areas • Rainfed areas highly prone to land degradation due to erratic and uneven rainfall pattern • Poverty in rainfed areas is caused and compounded by resource degradation • High % of area still dependent on rainfall for farming • Dependence of rainfed areas for oil seeds, pulses and cereals production • Rainfed area agriculture is the major source of fluctuation in food grain production • In the short or medium term, it is difficult to shift the large population dependent on rainfed farming to non land based activities • Continued degradation in rainfed areas is an“Environmental and Social Hazard”

4. Early Initiatives of NABARD in Rainfed /dryland area development • Inclusion of “Dryland Farming and Watershed development” as thrust area in Prime Ministers 20 points programme in early eighties • NABARD’s attempt to evolve policies and models for involving banks continues • Consultation policy workshops with ICRISAT and CRIDA • Providing 100% refinance for watershed based dryland farming • Arrangements for sympathetic treatment of past defaults • Holding regional and district level workshops for bankers • Running pilot projects on “Cyclical Credit” model

5. Lessons learnt by NABARD • Large proportion of small and marginal farmers do not produce a marketable surplus of traditional crops. • Farmers were not bankable • Different loan products need to be introduced for them on the lines of SHGs, portfolio or homestead financing • Large gap existing between technology developed on research farms and that actually practiced by farmers • Profitable agriculture under uncertain moisture conditions require greater not lesser technological and managerial sophistication than under assured irrigation conditions

6. Lessons learnt by NABARD • Risk of failure higher in rainfed areas due to erratic, uncertain and unseasonal monsoons • Confidence was lacking among the community and the bankers • Very strong support systems for input and technology supply and marketing are necessary if farmers have to adopt appropriate land use ( agri-horti, agri-silvi systems) • In pilots, farmers with or without credit, selectively adopted some aspects of dryland farming technology such as improved seeds but did not adopt recommended farming systems such as contour cultivation, broad bed and furrow techniques, fertilizer application,etc.

7. Problems faced by banks for financing in rainfed areas • High inherent risk in rainfed agriculture and the absence of necessary conditions whereby the community and banks develop mutual confidence to take up private investments • Past default among the farmers • Lack of updated land records is major hindrance for land based activities • The scale of operation in credit dispensation in dryland areas may not always match with the economic scales normally considered by banks • High credit risk • Poor credit absorption capacity of the farmers • Unless the banker is assured of responsible banking behaviour from the community, banks would be vary of providing fresh loans where past defaults exists

8. Implementation of IGWDP by NABARD • Participatory approach- Involvement of every farmer • Implementation of the projects through NGOs as channel partners • Capacity building of watershed families and NGOs • Adoption of net planning concept • Ridge to valley treatment of watershed projects • Smooth flow of funds • Creation of maintenance fund • Social capital formation- VWCs, SHGs, etc. • Creation of WDF in NABARD by GoI • Augmentation of funds from RIDF interest differentials

9. Promotional & Developmental Programmes WATERSHED DEVELOPMENT PROGRAMMES TRIBAL DEVELOPMENT PROGRAMMES Soil & Water Conservation Enhancement of Farm Production, Productivity Enhancement of Farmers’ Income Ensuring sustainable development through creation and operation of maintenance fund Create additional Employment Opportunities Climate Change Adaptation & Risk Mitigation Providing Support for holistic development of Tribal communities Core of the programme is “Wadi”, a small orchard Integral component of NABARD’s Natural Resource Management (NRM) policy of providing sustainable livelihoods Objectives No of Projects – 746 Sanctioned INR 2330 crore| Released INR 1600 crore Families Covered – 0.534 mn Area Covered – 0.429 m ac in 27 States/UTs Total Projects – 2874| Completed – 1419 Area Covered – 2.08 mha| in 27States Amount Sanctioned – INR 2035 crore| Disbursed INR 1723 crore Status

10. Watershed Development Programme: Impact 26-35% 35% 29-153% 30% Increase in Area Under Cultivation Reduction in Soil Erosion Increase in Groundwater Recharge in watersheds Increase in Crop Productivity

11. Impact – Land-use Changes Bayyaram Watershed, Karimnagar, Telangana Note: Done by NRSC, Hyderabad through Satellite Imagery (Area in Ha)

12. Restoration of degraded soils in completed watershed projects funded by KfW • Additional physical SWC, erosion & degradation control & land reclamation measures • Improvement of soil quality and health/ land Improvement • Introduce & promote sustainable NRM, CCA & farming practices • Improve nutritional Security • Promotion of simple measures to mitigate Climate risk • Capacity & institutional building • Knowledge management mainstreaming & up scaling programme experience

13. Loan cum grant based NRM programme UMBRELLA PROGRAMME FOR NRM (UPNRM) Guiding Principals To improve rural livelihoods through community-based and sustainable NRM interventions To Gradually shift from Grant-based to Loan-based Model and from Project-based to Programme-based approach A bilateral policy based programme supported by KfW Germany and GIZ, with credit+ approach to support Loan programme • Pro-poor orientation • Sustainability Focus • Community Participation • Good Governance • Integrated and need-based approach Objectives Total Projects Sanctioned – 334 across the Country Total Loan Sanctioned – INR 780 crore| Disbursed – INR 540 crore Grant Sanctioned – inr 42.20 CRORE| Disbursed –INR 29 crore Status

14. NABARD as NIE • Capacity building of stakeholders • Facilitating identification of project ideas/concepts from SAPCC • Facilitating Project Formulation • Appraisal • Once sanctioned, overall management of the projects, Monitoring and Reporting and Evaluation

15. Restoration of Degraded Land Project under NAFCC Regional project on “Restoration of degraded landscapes to natural state of ecosystem” Guiding Principals • To enhance the ecosystem services for promotion of livelihood opportunities • To build climate resilience as a mitigation and adaptation strategies • To conserve local bio diversity (threatened plant and animal species) • To conserve soil and moisture in Semi-arid areas • To create awareness and sensitize the local population about ecosystem services • Climate empowerment of current and future generations • To contribute in increasing green cover. • Identification of common vulnerabilities of Human/Natural System in a Region • Engagement of specialised agency for technical inputs, monitoring, evaluations • For tangible Impacts and Visibility Objectives Grant Sanctioned for the project – Rs. 126.10 crore States to be covered - Rajasthan, Maharashtra and Telangana Status

16. Suggested incentive mechanism for promotion of bankable investments under LDN in rainfed areas • Land and water are integral part of addressing LDN issues • Creation of a separate fund for funding of basic land restoration interventions under LDN on the lines of NAFCC • Formulation of Regional specific bankable modelsfor financing LDN investments activities by banks during post land restoration phase • Capacity Building of banking institutions • Dedicated risk fund at national level for promoting bank investments • Comprehensive insurance for coverage of crops, income, and all farm assets • Interest subvention and or capital investment subsidy for banking institutions

17. Thank You