1. ACA-TM-37 (v2.2-20-Nov-10 ) OVERVIEW OF AGRICULTURE R N Panigrahi,GM & MoF –November 12,2013

2. ACA-TM-37 (v2.2-20-Nov-10 ) India’s share in agriculture 52% of the landmass as cultivatable land as against 11% in the world. Variety of climate conditions sunshine round the year. 168 million hectares of arable land (second largest after USA) - 60 million hectares irrigated. Extensive network of agricultural research system. India -world’s 3rd largest producer of agricultural commodities (after China and USA) Second largest producer of paddy (20% share), wheat (12%), maize (20%), sugarcane (17%) ground nut (15%). Accounts for 8% of world’s fruit - 15% of vegetables production. 41 % of mangoes, 30 % of cauliflowers, 28 % of tea, 23 % of bananas, 24 % cashew nuts, 36 % of green peas 10 % of onions 28 % pepper 35 % of ginger 90 % of turmeric 70 % of spice oils 2

3. ACA-TM-37 (v2.2-20-Nov-10 ) Some facts on agriculture 2008-092009-102010-112011-122012- 13(Estimat ed) Growth in agri -0.1%0.4%6.6%3.61.8 Contributio n to GDP 15.7%14.6%14.4%14.0% Total GDP growth 6.8%8.0%8.5%6.2%5% Target for agri growth 4% 3

4. ACA-TM-37 (v2.2-20-Nov-10 ) 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 4

5. ACA-TM-37 (v2.2-20-Nov-10 ) Category-wise number of land holdings 5

6. ACA-TM-37 (v2.2-20-Nov-10 ) Avg. size of land holdings across categories Hectares 6

7. ACA-TM-37 (v2.2-20-Nov-10 ) 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 7

8. ACA-TM-37 (v2.2-20-Nov-10 ) Problems of the rural economy Infrastructure development – Rural roads, bridges, market yards etc. – Irrigation – Power supply – Communication network 8

9. ACA-TM-37 (v2.2-20-Nov-10 ) Problems of the rural economy Lack of access to financial services – Saving services – Insurance services – Remittance services – Credit services 9

10. ACA-TM-37 (v2.2-20-Nov-10 ) 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

11. ACA-TM-37 (v2.2-20-Nov-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

12. ACA-TM-37 (v2.2-20-Nov-10 ) 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

13. ACA-TM-37 (v2.2-20-Nov-10 ) Ground Level Credit Flow – Impressive Growth … Source: IBA and NABARD 13

14. ACA-TM-37 (v2.2-20-Nov-10 ) Commercial banks leading the way… Source: IBA and NABARD 14

15. ACA-TM-37 (v2.2-20-Nov-10 ) Flagging long term investments in agriculture… 15

16. ACA-TM-37 (v2.2-20-Nov-10 ) Month-wise Distribution of Disbursements All Agencies Agency wise data also show the same picture 16

17. ACA-TM-37 (v2.2-20-Nov-10 ) 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

18. ACA-TM-37 (v2.2-20-Nov-10 ) Legal changes facilitating agricultural activities Model APMC Act Warehouse (development and regulation) Act 2007 18

19. ACA-TM-37 (v2.2-20-Nov-10 ) Lending to agriculture Innovations – Kisan credit card – Self-Help Groups – micro credit – Farmers’ Club – Joint Liability Groups – Farmers Producer Organisation 19

20. ACA-TM-37 (v2.2-20-Nov-10 ) Approach paper to 12 th 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 11 th plan.(about 8 lakh crore per annum) Creation of rural infrastructure including soft infrastructure. Credit widening along with credit deepening Aggregation methodology to take in SF/MFs 20

21. ACA-TM-37 (v2.2-20-Nov-10 ) Approach paper to 12 th 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

22. ACA-TM-37 (v2.2-20-Nov-10 ) 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

23. ACA-TM-37 (v2.2-20-Nov-10 ) THANK YOU For your Attention