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OVERVIEW OF AGRICULTURE

OVERVIEW OF AGRICULTURE. R N Panigrahi ,GM & MoF –November 12,2013. India’s share in agriculture. Some facts on agriculture. Some more facts on agriculture. With 2.4% of world geographical area we are required to feed 17% of world population and 15% of world live stock.

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OVERVIEW OF AGRICULTURE

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  1. OVERVIEW OF AGRICULTURE R N Panigrahi ,GM & MoF –November 12,2013

  2. India’s share in agriculture

  3. Some facts on agriculture

  4. Some more facts on agriculture • With 2.4% of world geographical area we are required to feed 17% of world population and 15% of world live stock. • Growth in agriculture in 2002-03 to 2004-05 was 0.89% • Export contribution by agriculture—10.2 • 58% of population employed in agriculture • Provides demand for other sectors • Provides raw materials for some industries. • Vital for containing food inflation

  5. Category-wise number of land holdings

  6. Avg. size of land holdings across categories Hectares

  7. Problems of the rural economy • Resource development • Land – fragmentation, low productivity, conversion viability, bankability, transaction costs • Water resources • Dry-land agriculture • Manpower resources • Low skill levels • Low mobility/Migration • Low productivity • Non-availability • Capital scarcity

  8. Problems of the rural economy • Lack of access to financial services • Saving services • Insurance services • Remittance services • Credit services

  9. Rural lending - Features • Greater dispersion of the clientele • Seasonality of rural activities • Rigidity of agricultural cycles • Small size of the transactions • Lack of borrower assets • Absence of standardized information • Greater exposure to risk

  10. Rural credit The multi-agency approach to rural credit • cooperatives, commercial banks, RRBs, Credit from institutional and non-institutional sources AIDIS 1991 • Non-institutional sources – 30.6% AIDIS 2002 • Non-institutional sources –38.9%

  11. Rural credit • Change in policy stance since 2004 • Targets given for the banks • Interest subvention for Public Sector Banks • Extended to Pvt Sector scheduled commercial banks from 2013-14 • Interest subvention for post-harvest credit • Restructuring of credit in case of natural calamity • Collateral free loan up to Rs 1 lakh

  12. Ground Level Credit Flow – Impressive Growth … Source: IBA and NABARD

  13. Commercial banks leading the way… Source: IBA and NABARD

  14. Flagging long term investments in agriculture…

  15. Month-wise Distribution of Disbursements All Agencies Agency wise data also show the same picture

  16. Steps in Budget 2013-14 for promoting agriculture • Agri target for 2013-14 increased to 7,00,000 crore. • Interest subvention scheme for crop loan to continue. • Interest subvention extended to SCBs in pvt sector. • Matching equity grant to be provided to Farmers Producer Organisations • Credit Guarantee Fund to be created in Small Farmers Agri Business Corporation • Rs 10000 crore set aside for National Food Security.

  17. Legal changes facilitating agricultural activities Model APMC Act Warehouse (development and regulation) Act 2007

  18. Lending to agriculture • Innovations • Kisan credit card • Self-Help Groups – micro credit • Farmers’ Club • Joint Liability Groups • Farmers Producer Organisation

  19. Approach paper to 12th plan(2012-17) Finance PACS through CBs Agri to grow at annual rate of 4% Total credit requirement to be double that of during the 11th plan.(about 8 lakhcrore per annum) Creation of rural infrastructure including soft infrastructure. Credit widening along with credit deepening Aggregation methodology to take in SF/MFs

  20. Approach paper to 12th plan(2012-17)(contd) • Investment credit to be increased by aggregation through PACS • Development of soft infrastructure • Increasing insurance penetration in livestock from 7 to 30% • Single insurance policy for farmer covering all his assets. • Enable SF/MF to take part in future market • Contract farming through amendment in APMC Act • Issue of no title to land of SF/MF

  21. Other issues • Issue of mindset and motivation/ HR policy of banks • ICT in rural lending • Expanding outreach of banks in the rural sector • Sachet banking • Financing value chain • Primary production to value addition • Borrower information sharing • Technology for information dissemination • R & D activities and extension network • Water management • Legal support for recovery • Risk management • Land laws and land-leasing/absentee land lord. • Land acquisition for non-agricultural purposes

  22. THANK YOU For your Attention

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