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

OVERVIEW OF

AGRICULTURE

R N Panigrahi ,GM & MoF –November 12,2013

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

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

Some facts on agriculture

2008-09 2009-10 2010-11 2011-12 2012-13(Estimated)

Growth in agri

-0.1% 0.4% 6.6% 3.6 1.8

Contribution to GDP

15.7% 14.6% 14.4% 14.0% 14.0%

Total GDP growth

6.8% 8.0% 8.5% 6.2% 5%

Target for agrigrowth

4% 4% 4% 4% 4%

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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

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Category-wise number of land holdings

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Avg. size of land holdings across categoriesH

ecta

res

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Problems of the rural economy• Resource development

– Land – fragmentation, low productivity, conversionviability, bankability, transaction costs

– Water resources• Dry-land agriculture

– Manpower resources• Low skill levels• Low mobility/Migration• Low productivity• Non-availability

– Capital scarcity7

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Problems of the rural economy

• Lack of access to financial services– Saving services– Insurance services– Remittance services– Credit services

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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

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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%

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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

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Ground Level Credit Flow – Impressive Growth …

Source: IBA and NABARD 13

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Commercial banks leading the way…

Source: IBA and NABARD 14

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Flagging long term investments in agriculture…

1975

-76

1993

-94

1995

-96

1996

-97

1998

-99

1999

-200

0

2000

-01

2001

-02

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

0

10

20

30

40

50

60

70

80

90

100

69 68 66 64 65 65 63 63 65 66 63 61 58 6071 70 72 71 78

31 32 34 36 35 35 37 37 35 34 37 39 42 4029 30 28 29 22

Share of LT

Share of ST

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Month-wise Distribution of Disbursements All Agencies

April4%

May5%

June7%

July8%

August8%

September6%

October7%

November7%

December10%

January8%

February9%

March21%

Lean Period(Jan-Mar)

38%

Avg (2007-11)Agency wise data also show the same picture

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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.

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Legal changes facilitating agricultural activities

Model APMC Act

Warehouse (development and regulation) Act 2007

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Lending to agriculture

• Innovations– Kisan credit card – Self-Help Groups – micro credit– Farmers’ Club– Joint Liability Groups– Farmers Producer Organisation

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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 lakh crore per annum)• Creation of rural infrastructure including soft

infrastructure.• Credit widening along with credit deepening• Aggregation methodology to take in SF/MFs

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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

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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

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THANK YOU

For your Attention