Final Complete Nabard

Role of NABARD in Indian agricultural sector
EXECUTIVE SUMMARY
T h e p a r l i a me n t t hr o u g h Ac t 6 1 o f 8 1 s e t u p N a t i o n a l
B a n k f o r Ag r i c u l t ur a l a n d R u r a l D e v e l o p me n t [ N A B A R D ]
a f t e r t h e f o r m e r c h a i r ma n o f R e s e r v e B a n k o f I n d i a S h r i .
B . S i v a r a m a n s u b m i t t e d a r e p or t t o t h e G o v e r n o r o n
N o v e m b e r 2 8 , 1 9 7 9 . Th e c o m mi t t e e s e t u p b y S i v a r a ma n
r e v i e w e d t h e a r r a n g e me n t s f o r I n s t i t u t i o n a l C r e d i t f o r
A g r i c u l t ur e a n d R u r a l D e v e l o p me n t C R A F I C A R D .
Th e o bj e c t i v e s o f N A B A R D w a s t o b e a b l e t o p r o v i d e
a d e q u a t e a s s i s t a n c e t o t h e m i l l i o n s o f f a r me r s i n r ur a l
I n d i a w h o w e r e n ot b e i n g gi v e n a n y i mp o r t a n c e i n t h e
q u i c k a n d e v er r i s i n g e c o n o m i c b o o m t h a t w a s h a p p e n i n g
with
Indian
markets
and
industries.
Th e
c o m mi t t e e
d e c i d e d o n t h e f a c t t h a t t h e Ag r i c u l t ur a l s e c t o r d e s e r v e d
a s m u c h a t t e n t i o n a s t h e o t h er s e c t o r s , i t b e i n g a s o u r c e s
of
e c o n o my
that
India
l a rge l y
depends
on
thus
the
c o m mi t t e e r e a l i z e d t h a t t h e h u g e c r e d i t t h a t t h e s e c t o r
w o u l d r e q u i r e t o a c h i e v e a n y k i n d o f d e v e l o p m e n t . Th e r e
w a s a r e q u i r e m e n t f o r i n c o r p or a t i o n o f t h e c r e d i t sy s t e m
a n d r u r a l a gr i c u l t u r a l d e v e l o p m e n t .
N A B A R D ' S t a s k w a s t o b e t o pr o m o t e i n n o v a t i o n s a n d
e n c o u r a g e i n i t i a t i v e s i n t h e a g r i c u l t ur a l s e c t o r a n d a l s o t o
p r o mo t e s u b s t a n t i a l a n d e q u i t a b l e a g r i c u l t u r a l a n d t h e
r ur a l d e v e l o p m e n t w h i c h w a s l o n g d u e t o t h e I n d i a n
f a r me r s t hr o u g h e ffe c t i v e cr e d i t s u p p o r t a n d o t h er s e r v i c e s
which would be required to attain its mission and also
i n f r a s t r u c t ur e
and
institutional
1
building
through
the

finance it would provide. Since the Reserve Bank of India
a l r e a dy
had
mu l t i p l e
issues
to
deal
with
r e g ar d i n g
financing, regulating and monitoring various financial

sectors the RBI was not in a position to give its complete
attentions to the sector of agriculture with the integration
of credit financing.
Th i s pr o j e c t di s c u s s e s a b o u t t h e I n di a n a gr i c u l t u r e
s e c t o r, i t s f e a t u r e s i t s r o l e i n I n d i a n e c o n o my a n d i t s
developmental
p r o b l e m.
Th e
p r oj e c t
concentrates
on
N A B A R D c o mp l e t e l y i t d i s c u s s e s a b o u t i t cr e d i t a n d o t h er
f u n c t i o n s a n d i t s r ol e i n I n d i a n a g r i c u l t ur a l s e c t o r.
Index
Sr
CONTENTS
No.
1
2
3
Design of study
Introduction to NABARD
NABARD funding, associates,
4
5
6
7
8
9
10
11
12
subsidiaries & structure

Introduction to Indian agriculture
Agriculture in Indian economy
Functions of NABARD
Financial functions of NABARD
Developmental functions of NABARD
Supervisory functions
Achievements of NABARD
Conclusion
Bibliography &Webliography
Design of study
Objectives
To study the role of agriculture in Indian economy.
3
To know the problem faced by the Indian agricultural

sector.
To study the role and function of NABARD.
To know about the credit facilities provided by
NABARD.
Methodology
This is project is completely based on secondary data.
The project is completed by going through various books on
Indian agriculture, role of NABARD in this field etc.
The project is based on various references taken from books
as well as various websites mentioned in the bibliography at the
end.
Scope
Within the scope of this project, the project will discuss the
topic which is the relation of NABARD with Indian agriculture
sector and will try to analyze through its various schemes and
funds whether its legislative intent has been fulfilled.
4
CHAPTER 1
INTRODUCTION TO
NABARD
INTODUCTION
HISTORY
MISSION
COMPANY
OBJECTIVES
1.1 INTRODUCTION- NATIONAL BANK FOR

AGRICULTURAL AND RURAL DEVELOPMENT
NABARD is an apex institution accredited with all
matters concerning
policies, planning and operation in
t h e f i e l d o f c r e d i t f o r a g r i c u l t ur e a n d e c o n o mi c a c t i v i t i e s
i n r ur a l a r e a s . N A B A R D o p e r a t e s t hr o u g h o u t t h e c o u n t r y
t h r o u g h i t s h e a d o ffi c e a t M u mb a i , 2 5 r e g i o n a l o ffi c e s a n d
s u b - o ffi c e s , l o c a t e d i n t h e c a p i t a l s o f a l l s t a t e s / u n i o n
territories. It also has 4 training establishments. It takes
measures
towards
institution
building
for
i mp r o v i n g
absorptive capacity of the credit institutions, training of

personnel,
etc...
it
c o or d i n a t e s
the
r ur a l
financing
activities of all institutions engaged in development work

at all the field levels and maintains liaison with the
Government of India, State Government, Reserve Bank o f
India and other national level institutions concerned with
t h e p o l i cy f o r mu l a t i o n . I t p r e p a r e s o n a n n u a l b a s i s , r u r a l
c r e d i t pl a n s f o r a l l d i s t r i c t s i n t h e c o u n t r y, t h e s e p l a n s
form the base for annual credit plans of all rural financial
institutions. It undertakes monitoring and evaluation of
p r o j e c t r e f i n a n c e d by i t . I t p r o mo t e s r e s e a r c h i n t h e f i e l d s
o f r ur a l b a n k i n g , a g r i c u l t u r e a n d r u r a l d e v e l o p m e n t .
Reserve Bank of India (RBI) combined diverse functions
and duties including rural credit. RBI could not devote
s u ffi c i e n t
attention
to
the
details
of
c o mp l e x
credit
p r o b l e ms o f i n t e g r a t e d r u r a l d e v e l o p m e n t i n t h e m i d s t o f
i t s m u l t i f a r i o u s a n d g r o w i n g r e s p o n s i b i l i t i e s i n v ar i o u s
o t h e r f i e l d s . Th i s w a s t h e p r o b l e m o f R B I u n t i l 1 9 8 1 . I n
7

order
to
rectify
A g r i c u l t ur e
and
this
p r o b l e m,
Rural
National
Development
Bank
for
(NABARD)
was
established in July 1982 on basis of the recommendations

o f t h e S i v a r a ma n C o m mi t t e e ( 1 9 7 8) . S i n c e t h e n , N A B A R D
h a s t a k e n o v e r a n d d e c e n t r a l i z e d t h e R B I s f u n c t i o n s i n
t h e s p h e r e o f r ur a l cr e d i t f o r t h e p r o mo t i o n o f a g r i c u l t u r e ,
small scale industries, Cottage and village industries,
h a n d i c r a f t s a n d ot h e r r u r a l c r a f t s a n d a l l i e d e c o n o m i c
activities in rural areas.
Th e N A B A R D , t h e a p e x b a n k h a s b e e n e n v i s a g e d a s a n
o r ga n i z a t i o n a l
device
to
pr o v i d e
undivided
attention,
forceful direction and a pointed focus to the credit

p r o b l e ms a r i s i n g o u t o f a n i n t e gr a t e d a p p r o a c h t o r ur a l
development. On its establishment, NABARD has taken
over from the RBI its refinancing functions in relation to
S t a t e C o - o p e r a t i v e B a n k s a n d R e g i o n a l R u r a l B a n k s . Th e
Bank is now the Co-coordinating agency in relation to the
Central
G o v e r n me n t ,
planning
Commission,
State
g o v e r n me n t s a n d i n s t i t u t i o n s a t a l l I n d i a a n d St a t e l e v e l s
e n g a g e d i n g i v i n g e ffe c t t o t h e v a r i o u s p o l i c i e s a n d
p r o gr a m m e s r e l a t i n g t o r ur a l c r e d i t . As a d e v e l o p m e n t
b a n k f o r t h e r u r a l s e c t o r, N A B A R D w i l l h a v e s p e c i a l
responsibility to ensure that the training facilities for the
b a n k s t a ff e n g a g e d i n r ur a l l e n d i n g ar e a d e q u a t e . To t h e
extent
that
the
training
schemes
are
sponsored
and
f i n a n c e d by t h e Ag r i c u l t ur a l R e f i n a n c e a n d D e v e l o p me n t
Corporation
(ARDC),
these
will
a u t o ma t i c a l l y
stand
t r a n s f e r r e d t o N A B A R D . Th i s i s a f i e l d i n w h i c h t h e R B I
8

s h o u l d c o n t i n u e t o t a k e a c t i v e i n t er e s t a n d t a k e t h e
n e c e s s a r y m e a s u r e s t o s t r e n g t h e n t h e e ffo r t s o f N A B A R D
a t i mp r o v i n g a n d e x p a n d i n g t h e t r a i n i n g f a c i l i t i e s f o r
p r o j e c t a n d p r o gr a m m e l e n d i n g .
I t t o o k o v er t h e f u n c t i o n s o f e r s t w h i l e Ag r i c u l t ur e
C r e d i t D e p a r t me n t , R u r a l P l a n n i n g a n d C r e d i t D e p a r t m e n t ,
Rural Planning and Credit Cell of Reserve Bank of India
a n d Agr i c u l t u r e R e f i n a n c e a n d D e v e l o p me n t C o r p o r a t i o n .
Th e m a i n f u n c t i o n s o f N A B A R D p e r t a i n l o p o l i cy
development,
relating
to
coordination,
rural
credit.
research,
It
training,
provides
etc.,
refinance
lo
cooperatives, regional rural banks, etc. Moreover it makes

l o a n s a n d a d v a n c e s t o s t a l e g o v e r n me n t s f o r a p e r i o d n o t
exceeding more than 20 years to enable (hem lo subscribe
d i r e c t l y o r i n di r e c t l y l o s h a r e t h e c a p i t a l o f c o o p e r a t i v e
credit societies.
I t a l s o p r o mo t e s r e s e a r c h i n a g r i c u l t ur e a n d r u r a l
d e v e l o p m e n t t h r o u g h i t s r e s e a r c h a n d d e v e l o p me n t f u n d . I t
u n d e r t a k e s i n s p e c t i o n o f c o- o p e r a t i v e b a n k s a n d R R B s a n d
a d v i s e s t h e g o v er n m e n t o n r e l a t e d m a t t e r s .
NABARD undertakes monitoring and evolution of the
p r o j e c t s f i n a n c e d by i t . Th e N A B A R D m a i n t a i n s t w o
funds;
Th e
operations)
National
and
the
Rural
Credit
National
Fund
Rural
( l o n g - t er m
Credit
Fu n d
( S t a b i l i z a t i o n) .
Th e C e n t r a l a n d S t a t e G o v e r n me n t s c o n t r i b u t e t o t h e
fund.
Th e
NABARD
operates
9
t hr o u g h o u t
the
country

t h r o u g h i t s 1 6 r e g i o n a l o ffi c e s l o c a t e d i n t h e c a p i t a l s o f
a l l t h e m a j o r S t a l e s a n d 3 s u b o ffi c e s , t h e p a i d - u p c a p i t a l
o f N A B A R D s t o o d a t R s . 2 0 0 0 cr o r e a s o n M a r c h 3 1 , 2 0 1 0 .
T h e p r o f i t a f t e r t a x a mo u n t e d t o R s . 1 5 5 8 cr o r e d u r i n g t h e
y e ar 2 0 0 9- 1 0 a s a g a i n s t R s . 1 3 9 0 c r or e d u r i n g t h e y e a r
2 0 0 8 - 0 9 . S o ur c e s o f F u n d
NABARD had a paid-up share capital of Rs. 100 crore,
since this has been raised through stages to Rs. 5,000
c r o r e . Th e N A B A R D i s e mp o w e r e d t o b or r o w f r o m c e n t r a l
g o v e r n me n t .
I t i s a l s o p e r m i t t e d t o b o r r o w f o r e i g n c u r r e n c y. I t c a n
a l s o b or r o w l o n g - t er m l o a n s f r o m a ny o t h e r a u t h o r i t y o r
o r ga n i s a t i o n o r i n s t i t u t i o n a p p r o v e d b y t h e B o a r d , I t i s
e m p o w e r e d t o i s s u e b o n d s , d e b e n t u r e s a n d ot h e r f i n a n c i a l
instruments.
1.2 HISTORY
N A B A R D w a s e s t a b l i s h e d o n t h e r e c o m me n d a t i o n s o f
S h i v a r a ma n C o m m i t t e e , ( by a c t 6 1 , 1 9 8 1 o f P a r l i a me n t ) o n
12
July
1982
to
i mp l e m e n t
the National
Bank
for
A g r i c u l t u re a n d R u r a l D e v e l o p m e n t Ac t 1 9 8 1 . I t r e pl a c e d
t h e Ag r i c u l t ur a l
Credit Department
(ACD)
and Rural
P l a n n i n g a n d C r e d i t C e l l ( R P C C ) o f R E S E RVE B A N K
INDIA
and
Ag r i c u l t ur a l
Refinance
and
OF
D e v e l o p me n t
C o r p o r a t i o n ( A R D C ) . I t i s o n e o f t h e p r e mi e r a g e n c i e s t o
provide
credit
in
rural
areas.
10
NABARD
is
India's

s p e c i a l i s e d b a n k f o r Agr i c u l t u r e a n d R u r a l D e v e l o p me n t i n
India.
Th e i n i t i a l c a p i t a l o f N A B A R D w a s R s . 1 0 0 c r or e .
C o n s e q u e n t t o t h e r e v i s i o n i n t h e c o mp o s i t i o n o f s h a r e
c a p i t a l b e t w e e n G o v e r n me n t o f I n d i a a n d R B I , t h e p a i d u p
c a p i t a l a s o n 3 1 M a r c h 2 0 1 3 , s t o o d a t 4 0 0 0 c r or e w i t h
Government of India holding 3,980 crore (99.50%) and
R e s e r v e B a n k o f I n d i a 2 0 . 0 0 cr o r e ( 0 . 5 0 % ) .
As o n 3 1
March
stood
2014,
NABARD
paid
up
capital
at
R s . 4 7 0 0 c r o r e ( R s . 4 6 8 0 C r o r e o f G oI a n d R s . 2 0 C r o r e o f
RBI).
I n t e r n a t i o n a l a s s o c i a t e s o f N A B A R D r a n g e s f r o m Wor l d
B a n k - a ffi l i a t e d
o r ga n i z a t i o n s
to
global
developmental
agencies working in the field of agriculture and rural

development.
Th e s e
o r ga n i z a t i o n s
help
NABARD
by
a d v i s i n g a n d g i v i n g m o n e t a r y a i d f o r t h e u pl i f t me n t o f t h e
p e o p l e i n t h e r u r a l a r e a s a n d o pt i m i z i n g t h e a g r i c u l t u r a l
process.
1.3 MISSION
P rom o t e s u s t a i n a b l e a n d e q u i t a b l e a g r i c u l t u re a n d
r u r a l p ros p e r i t y t h rou g h e f f e c t i v e c red i t s u p p o r t , rel a t e d
services, institutions development and other innovation
initiatives.
1.7 COMPANY
11

N A B A R D c r e a t e d a n o n- b a n k i n g f i n a n c i a l c o m p a n y
[NBFC] NABARD Financial Services [Nabfins] in 2007.
As
required
institute
by
to
accounting
its
help
n e t w or k s
address
disclosure,
NABARD
issues
high
of
created
this
transparency
transaction
costs,
in
p o or
d i v e r s i f i c a t i o n o f pr o d u c t s , a n d h i g h r a t e s o f i n t e r e s t s .
N A B A R D s
dispersion
ability
is
to
strongly
market
the
enhanced
innovative
t hr o u g h
use
credit
of
its
network.
1.8 OBJECTIVES OF NABARD

Th e N A B A R D i s a n a p e x d e v e l o p me n t b a n k w h i c h
p r o v i d e s h e l p f o r a g r i c u l t u r a l a n d r u r a l d e v e l o p me n t . I t
has been established with the following objectives:
1 . To gi v e u n d i v i d e d a t t e n t i o n a n d p ur p o s e f u l d i r e c t i o n t o
i n t e g r a t e d r ur a l d e v e l o p m e n t ;
2 . To a c t a s a c e n t r e p i e c e f o r t h e e n t i r e r ur a l c r e d i t
system at the national level;
3 . To a c t a s a pr o v i d e r o f s u p p l e me n t a l f u n d i n g t o r u r a l
credit institutions;
4 . To ar r a n g e f o r i n v e s t me n t C r e d i t t o s m a l l i n d u s t r i e s ,
v i l l a g e a n d c o t t a g e i n d u s t r i e s , h a n d i c r a f t s a n d o t h er r u r a l
C r a f t s , ar t i s a n s a n d f a r me r s .
12

5 . To i m p r o v e t h e c r e d i t d i s t r i b u t i o n sy s t e m by i n s t i t u t i o n
building, rehabilitation of credit institutions and training
of bank personnel;
6.
To
pr o v i d e
refinance
facilities
to
State
Land
D e v e l o p m e n t B a n k s ( S L D B s ) , St a t e C o - o p e r a t i v e B a n k s ,
(SCBs), Regional Rural Banks (RRBs) and Commercial
B a n k s ( C B s ) f o r d e v e l o p m e n t p u r p o s e s i n r ur a l a r e a s ;
7 . To C o - or d i n a t e t h e w o r k i n g o f
d i ffe r e n t a g e n c i e s
e n g a g e d i n d e v e l o p me n t w o r k i n r ur a l a r e a s a t t h e r e g i o n a l
l e v e l , a n d t o h a v e l i a i s o n w i t h G o v e r n me n t o f I n d i a , R B I ,
S t a t e G o v e r n m e n t a n d o t h e r p o l i cy m a k i n g i n s t i t u t i o n s a t
the national level; and 150
8 . To i n s p e c t , m o n i t o r a n d e v a l u a t e p r o j e c t s g e t t i n g
refinance from the NABARD14. It was indeed a singular
m i s f o r t u n e o f t h e I n d i a n Ag r i c u l t u r a l B a n k i n g S y s t e m t h a t
i t d i d n o t h a v e a n a t i o n a l l e v e l c o mp o n e n t a t t h e t o p e v e n
a f t e r t hr e e a n d a h a l f d e c a d e s o f c o u n t r y s i n d e p e n d e n c e .
The Reserve Bank of India set up a Committee to Review
t h e Ar r a n g e me n t s f o r I n s t i t u t i o n a l C r e d i t f o r Ag r i c u l t ur e
a n d R u r a l D e v e l o p me n t ( C R A F I C A R D ) w h i c h s u b mi t t e d
i t s i nt e r i m R e p o r t i n N o v e m b e r 1 9 7 9 . Th e C R A F I C A R D
m a d e r e c o m me n d a t i o n s f o r t h e e s t a b l i s h me n t o f N A B A R D
a s a n a p e x i n s t i t u t i o n f o r a gr i c u l t u r a l f i n a n c i n g .
13
CHAPTER 2
NABARD- FUNDING,
ASSOCIATES,
SUBSIDARIES AND
STRUCTURE
FUNDING
ASSOCIATES
SUBSIDARIES
STRUCUTR
2.1 FUNDING
14

GOI & RBI provided initial capital of Rs.1, 000
million to start up the NABARD, which was enhanced to
R s . 2 0 , 0 0 0 m i l l i o n . B o t h t h e s e e n t i t i e s s t i l l pr o v i d e
significant financial contributions to NABARD and act not
only as business oriented funders but also have decisionm a k i n g p o w e r t h r o u g h s h a r e s i n t h e o rga n i z a t i o n a n d b y
d e c r e e i n N A B A R D s c o n s t i t u t i o n .
NABARD receives funding from National Rural Credit
Long
Ter m
O p e r a t i o n s , [ N R C - LTO]
[stabilization]
Fund,
as
well
Fund
as
&
from
the
NRC
Bonds
and
Debentures. NABARD borrows from commercial banks,

f o r e i g n c ur r e n cy l o a n s , R I D F d e p o s i t s , a mo n g o t h e r f u n d s ,
and
liabilities.
Th e s e
funds
are
p r i ma r i l y
meant
for
carrying out business with the intent of accelerating the

p r o c e s s o f a g r i c u l t ur a l a n d r u r a l d e v e l o p me n t i n I n d i a .
Factors
that
N A B A R D s
funding
c u r r e n cy
significantly
o p er a t i o n s
from
loans
RBI,
etc.
influence
include
GOI,
the
continuing
c o m me r c i a l
Committed
success
of
to
receive
banks,
foreign
financial
backing
the
o r ga n i z a t i o n i s c r i t i c a l f o r o p e r a t i o n s s u s t a i n a b i l i t y. Th e
f i n a n c i a l c r i s i s d ur i n g 2 0 0 7 - 0 8 pr e s e n t e d a pr e c a r i o u s
situation
as
funding
worldwide
was
scaled
back.
N A B A R D s a b i l i t y t o p e r c e i v e t hr o u g h s u c h c r i s i s a n d
c o n t i n u e t o c o v e r t h e i r c o s t s i s a d e t er m i n i n g f a c t o r t o
p u r s u e n e w i n i t i a t i v e s a n d p r o gr a m s .
2.2 ASSOCIATES
15

NABARD has main eight international associates,
w h i c h r a n g e f r o m Wor l d B a n k - a ffi l i a t e d o r ga n i z a t i o n s t o
g l o b a l d e v e l o p m e n t a g e n c i e s w or k i n g i n t h e f i e l d o f
a g r i c u l t u r e a n d r u r a l d e v e l o p m e n t . Th e y ar e [ i ] Wor l d
B a n k G r o u p & t h e I n t e r n a t i o n a l D e v e l o p me n t As s o c i a t i o n
[ i i ] K f W o f G e r ma n y [ i i i ] S w i s s Ag e n c y f o r D e v e l o p m e n t
& C o o p e r a t i o n [ i v ] C o m mi s s i o n o n E ur o p e a n C o m mu n i t y
[ v ] As i a n P a c i f i c Ag r i c u l t ur a l C r e d i t As s o c i a t i o n [ v i ]
I n t e r n a t i o n a l F u n d f o r Ag r i c u l t u r a l D e v e l o p m e n t [ v i i ]
GTZ
of
G e r ma ny
&[viii]
O r ga n i z a t i o n
of
Petroleum
E x p or t i n g C o u n t r i e s . Th e a s s o c i a t e s p l ay k ey r o l e i n
f u n d i n g p r o j e c t s a n d a s s i s t i n g i n p r o j e c t i m p l e me n t a t i o n
through
sustained
p a r t n er s h i p .
Th e
associates
o ffe r
f i n a n c i a l a n d a d v i s o r y s u p p o r t f o r i m p l e me n t i n g s c h e m e s
t h a t a r e a i m e d a t u p l i f t i n g t h e r u r a l p o or a n d m a k i n g
a g r i c u l t u r a l pr o c e s s e s e ffe c t i v e a n d y i e l d i n g . Fi n a n c i a l
s u p p o r t a n d a d v i s o r y r o l e o f Wor l d B a n k G r o u p a n d
continuation of Memorandum of Understanding between
NABARD & its associates would be a critical factor for
successful
pr o g r a m
i mp l e me n t a t i o n
and
carrying
out
N A B A R D s m i s s i o n .
2.3 SUBSIDIARIES
N A B A R D h a s t w o s u b s i d i a r y o rga n i z a t i o n s , v i z , t h e
NABARD
Bankers
Consultancy
Institute
of
S er v i c e s
Rural
[NABCONS]
and
the
[BIRD].
N A B C O N S i s e n g a g e d i n p r o v i d i n g c o n s u l t a n cy s e r v i c e s
16

in all spheres of agriculture, rural development and allied
a r e a s . Th e C o n s u l t a n cy l e v e r a g e s o n t h e c o r e c o m p e t e n c e
o f t h e N A B A R D i n t h e a r e a o f a g r i c u l t ur a l a n d r u r a l
development,
especially
encompassing
banking,
mu l t i d i s c i p l i n a r y
institutional
projects
d e v e l o p me n t ,
i n f r a s t r u c t ur e , t r a i n i n g e t c . B I R D pr i m a r i l y a c t s a s a
t r a i n i n g f a c i l i t y pr o v i d i n g i n f o r ma t i o n n e e d s o f r u r a l
b a n k e r s t hr o u g h i t s t o p i c a l t r a i n i n g p r o gr a m s & s e mi n a r s .
2.4 ORGANIZATIONAL STRUCTURE OF

NABARD.
Th e b a n k c o n s i s t s o f a B o a r d o f D i r e c t o r s a t t h e v e r y
t o p t o m a i n t a i n a ffa i r s a n d p o l i c y d e c i s i o n s w h o m a i n t a i n
control below them is an elected Chairman who is assisted
b y a M a n a g i n g D i r e c t o r. Th e r e a r e t w o E x e c u t i v e
Directors below the Managing Director who handles
a ffa i r s .
Th e r e a r e 2 6 H e a d O ffi c e D e p a r t me n t s a c r o s s t h e
c o u n t r y w h i c h i s t h e n p ar e d w i t h 2 8 R e g i o n a l O ffi c e s a n d
6 Tra i n i n g E s t a b l i s h me n t s .
Th e r e i s a l s o a S p e c i a l C e l l S u b- o ffi c e a t Sr i n a g a r i n
Jammu and Kashmir and 391 District Development
O ffi c e s . [ 3 ]
17
CHAPETR 3
INTRODUCTION TO
INDIAN AGRICULTURAL
SECTOR
INTODUCTION
PRESENT SCENARIO
FEATURES
18
3.1 INTRODUCTION
Ag r i c u l t u r e S e c t or o f I n d i a n E c o n o my i s o n e o f t h e
m o s t s i g n i f i c a n t p a r t s o f I n d i a . Ag r i c u l t u r e i s t h e o n l y
m e a n s o f l i vi n g f o r a l mo s t t w o- t h i r d s o f t h e e m p l oy e d
c l a s s i n I n d i a . As b e i n g s t a t e d by t h e e c o n o mi c d a t a o f
financial
y e ar
2006-07,
agriculture
has
acquired
18
p e r c e n t o f I n di a ' s G D P.
Th e a gr i c u l t u r e s e c t o r o f I n d i a h a s o c c u p i e d a l mo s t 4 3
p e r c e n t o f I n di a ' s g e o g r a p h i c a l a r e a . Agr i c u l t u r e i s s t i l l
t h e o n l y l a r ge s t c o n t r i b u t o r t o I n d i a ' s G D P e v e n a f t e r a
d e c l i n e i n t h e s a me i n t h e a g r i c u l t u r e s h a r e o f I n d i a .
A g r i c u l t ur e a l s o p l a y s a s i g n i f i c a n t r o l e i n t h e gr o w t h o f
socio-economic sector in India.
I n t h e e a r l i er t i m e s , I n d i a w a s l a r ge l y d e p e n d e n t u p o n
f o o d i m p o r t s b u t t h e s u c c e s s i v e s t o r i e s o f t h e a g r i c u l t ur e
s e c t o r o f I n d i a n e c o n o my h a v e m a d e i t s e l f - s u ffi c i n g i n
grain
production.
Th e
country
also
has
substantial
reserves for the same. India depends heavily on the

a g r i c u l t u r e s e c t o r, e s p e c i a l l y o n t h e f o o d p r o d u c t i o n u n i t
a f t e r t h e 1 9 6 0 c r i s i s i n f o o d s e c t o r. Si n c e t h e n , I n d i a h a s
p u t a l o t o f e ffo r t t o b e s e l f - s u ffi c i e n t i n t h e f o o d
p r o d u c t i o n a n d t h i s e n d e a v o r o f I n d i a h a s l e d t o t h e Gr e e n
R e v o l u t i o n . Th e G r e e n R e v o l u t i o n c a m e i nt o e x i s t e n c e
w i t h t h e a i m t o i m p r o v e t h e a g r i c u l t ur e i n I n d i a .
Th e s e r v i c e s e n h a n c e d b y t h e G r e e n R e v o l u t i o n i n t h e
a g r i c u l t u r e s e c t o r o f I n di a n e c o n o my a r e a s f o l l o w s :
19

- A c q u i r i n g m o r e ar e a f o r c u l t i v a t i o n p ur p o s e s
- Expanding irrigation facilities
- U s e o f i mp r o v e d a n d a d v a n c e d h i g h - y i e l d i n g v ar i e t y
of seeds
- I mp l e m e n t i n g b e t t e r t e c h n i q u e s t h a t e m e r ge d f r o m
agriculture research
- Wat e r m a n a g e me n t
- P l a n pr o t e c t i o n a c t i v i t i e s t hr o u g h p r u d e n t u s e o f
fertilizers, pesticides, and cropping applications
Al l t h e s e m e a s u r e s t a k e n b y t h e Gr e e n R e v o l u t i o n l e d t o
a n a l a r mi n g r i s e i n t h e w h e a t a n d r i c e pr o d u c t i o n o f
India's
a gr i c u l t u r e .
Considering
the
quantum
leap
w i t n e s s e d by t h e w h e a t a n d r i c e p r o d u c t i o n u n i t o f I n d i a ' s
a g r i c u l t u r e , a N a t i o n a l P u l s e D e v e l o p m e n t Pr o g r a m m e t h a t
covered almost 13 states was set up in 1986 with the aim
to introduce the improved technologies to the farmers. A
Tec h n o l o gy M i s s i o n w a s i n t r o d u c e d i n 1 9 8 6 r i g h t a f t e r t h e
s u c c e s s o f N a t i o n a l Pu l s e D e v e l o p me n t P r o gr a m m e t o
b o o s t t h e o i l s e e d s s e c t o r i n I n d i a n e c o n o my. Pu l s e s t o o
c a m e u n d er t h i s pr o g r a m m e . A n e w s e e d p o l i cy w a s
p l a n n e d t o p r o v i d e e n t r e e t o s u p e r i or q u a l i t y s e e d s a n d
plant material for fruits, vegetables, oilseeds, pulses, and
flowers.
Th e I n d i a n g o v e r n me n t a l s o s e t u p M i n i s t r y o f F o o d
P r o c e s s i n g I n d u s t r i e s t o s t i m u l a t e t h e a gr i c u l t u r e s e c t o r o f
Indian
e c o n o my
agriculture
sector
and
make
highly
it
mo r e
depends
lucrative.
upon
the
India's
monsoon
season as heavy rainfall during the time leads to a rich

h a r v e s t . B u t t h e e n t i r e y e a r ' s a gr i c u l t u r e c a n n o t p o s s i b l y
20

d e p e n d u p o n o n l y o n e s e a s o n . Tak i n g i n t o a c c o u n t t h i s
f a c t , a s e c o n d Gr e e n R e v o l u t i o n i s l i k e l y t o b e f o r me d t o
o v e r c o m e t h e r e s t r i c t i o n s . An i n cr e a s e i n t h e g r o w t h r a t e
and
irrigation
area,
i mp r o v e d
water
management,
i m p r o v i n g t h e s o i l q u a l i t y, a n d di v e r s i fy i n g i n t o h i g h
v a l u e o ut p u t s , f r u i t s , v e g e t a b l e s , h e r b s , f l o w e r s , m e d i c i n a l
p l a n t s , a n d b i o- d i e s e l a r e a l s o o n t h e l i s t o f t h e s e r v i c e s t o
be
taken
by
the
Green
Revolution
to
improve
the
agriculture in India.
3.2 PRESENT SCENARIO OF AGRICULTURAL

SECTOR IN INDIA
Th e E c o n o m i c S ur v e y 2 0 1 4 - 1 5 w a s r el e a s e d i n t h e
P a r l i a me n t b y A r u n J a i l t l e y . I t h a s h i g h l i g h t e d v a r i o u s
challenges
and
reforms
in
the
agriculture
s e c t o r.
A c c o r d i n g t o t h e s u r v ey, G D P d e c l i n e d t o 1 5 . 2% d ur i n g
the Eleventh Plan and then fur ther decreased to 13.9% in
2 0 1 3 - 1 4 . Th e r e a l s o h a s b e e n d e c r e a s e i n t h e n u m b e r o f
c u l t i v a t o r s f r o m 1 2 7 . 3 m i l l i o n ( C e n s u s 2 0 0 1 ) t o 118 . 7
m i l l i o n ( C e n s u s 2 0 11) .
Ac c o r d i n g t o t h e E c o n o m i c S ur v e y, g r o w t h r a t e s o f
p r o d u c t i v i t y i n a gr i c u l t u r e s e c t o r a r e f a r b e l o w g l o b a l
standards; productivity levels of rice and wheat have
d e c l i n e d a f t e r t h e g r e e n r e v o l u t i o n o f t h e 1 9 8 0 s . An o t h e r
i s s u e i s s o i l d e g r a d a t i o n d u e t o d e c l i n i n g f e r t i l i z e r- u s e
21

e ffi c i e n c y. A l s o ,
the
food
subsidy
has
increased
s u b s t a n t i a l l y i n t h e p a s t f e w y e a r s . F o o d s u b s i dy w a s R s .
9 2 , 0 0 0 c r o r e i n 2 0 1 3- 1 4 .
Wit h 6 0 p e r c e n t o f t h e t o t a l f o o d g r a i n s a n d o i l s e e d s
produced being grown in the kharif season, and with just
about 35 per cent of arable area being irrigated, Indian
a g r i c u l t u r e i s s t i l l d e p e n d e n t o n r a i n f a l l . Th e s e c o n d l o n g r a n g e f o r e c a s t f o r t h e c ur r e n t y e ar b y t h e I M D f o r
monsoon season indicates that the monsoon rainfall is
l i k e l y t o b e 9 3 p e r c e n t o f t h e L PA ( m o d e l e r r or 4 p e r
c e n t ) , w i t h 7 1 p er c e n t pr o b a b i l i t y o f s u b n o r ma l / d e f i c i t
r a i n f a l l a n d 7 0 p e r c e n t o c c u r r e n c e o f E l N i n o . Th e
g o v e r n me n t h a s p u t i n pl a c e c o n t i n g e n c y m e a s u r e s i n
about 500 districts.
C u r r e n t l y, I n d i a i s i n a n a n o m a l o u s s i t u a t i o n o f b e i n g
l a r ge l y s e l f - s u ffi c i e n t w i t h l a r ge s t o c k s o f f o o d g r a i n s o n
the one hand and registering high food inflation.
O n d o m e s t i c a n d i n t e r n a t i o n a l m a r k e t i n g , t h e pl e t h o r a
o f g o v e r n me n t i n t er v e n t i o n s t h a t w e r e u s e d t o b u i l d a
m a r k e t i n g s e t u p h a v e a c t u a l l y s e r v e d a s b a r r i er s t o t r a d e .
Removing
market
distortions
will
cr e a t e
greater
c o m p e t i t i o n i n m a r k e t s , p r o mo t e e ffi c i e n cy a n d gr o w t h
and facilitate the creation of a national
agricultural
market.
3.3 FEATURES OF INDIAN AGRICULTURE

22

Some of the outstanding features of Indian agriculture
are mentioned as follows.
1 . S u b s i s t e n c e a g r i c u l t u re:
M o s t p ar t s o f I n d i a h a v e s u b s i s t e n c e a g r i c u l t ur e . Th e
f a r me r o w n s a s ma l l pi e c e o f l a n d , g r o w s c r o p s w i t h t h e
h e l p o f h i s f a m i l y m e mb e r s a n d c o n s u me s a l m o s t t h e
entire farm produce with little surplus to sell in the
market.
Th i s t y p e o f a gr i c u l t u r e h a s b e e n p r a c t i c e d i n I n d i a f o r
t h e l a s t s e v e r a l h u n d r e d s o f y e ar s a n d s t i l l p r e v a i l s i n
s p i t e o f t h e l a r ge s c a l e c h a n g e s i n a g r i c u l t ur a l p r a c t i c e s
after Independence.
2 . P res s u re o f p o p u l a t i o n o n a g r i c u l t u re:
Th e p o p u l a t i o n i n I n d i a i s i n c r e a s i n g a t a r a p i d p a c e
a n d e x e r t s h e a vy pr e s s u r e o n a g r i c u l t ur e . Ag r i c u l t ur e h a s
t o p r o v i d e e mp l o y me n t t o a l a r ge s e c t i o n o f w or k f o r c e
a n d h a s t o f e e d t h e t e e m i n g m i l l i o n s . Wh i l e l o o k i n g i n t o
t h e p r e s e n t n e e d o f f o o d g r a i n s , w e r e q ui r e a n a d d i t i o n a l
12-15 million hectares of land to cope with the increasing
d e m a n d s by 2 0 1 0 A. D . M o r e o v e r, t h e r e i s r i s i n g t r e n d i n
urbanization.
Over one-fourth of the Indian population lived in urban
a r e a s i n 2 0 0 1 a n d i t i s e s t i m a t e d t h a t o v e r o n e- t h i r d o f t h e
t o t a l p o p u l a t i o n o f I n d i a w o u l d b e l i v i n g i n u r b a n ar e a s by
2 0 1 0 A. D . Th i s r e q u i r e s m o r e l a n d f o r ur b a n s e t t l e me n t s
w h i c h w i l l u l t i ma t e l y e n c r o a c h u p o n a g r i c u l t u r a l l a n d . I t
23

i s n o w e s t i ma t e d t h a t a b o u t 4 l a k h h e c t a r e s o f f a r m l a n d i s
n o w b e i n g d i v e r t e d t o n o n - a gr i c u l t u r a l u s e s e a c h y e a r.
3 . I mp o r t a n c e o f a n i ma l s :
An i m a l f o r c e h a s a l w ay s p l ay e d a s i g n i f i c a n t r o l e i n
agricultural
threshing
operations
and
such
transporting
as
the
ploughing,
irrigation,
a g r i c u l t ur a l
pr o d u c t s .
C o m p l e t e m e c h a n i s a t i o n o f I n d i a n a g r i c u l t ur e i s s t i l l a
d i s t a n t g o a l a n d a n i m a l s w i l l c o n t i n u e t o d o mi n a t e t h e
agricultural scene in India for several years to come.
4. Dependent upon Monsoon:
I n d i a n a g r i c u l t ur e i s m a i n l y d e p e n d e n t u p o n m o n s o o n
w h i c h i s u n c e r t a i n , u n r e l i a b l e a n d i r r e g u l a r. I n s p i t e o f t h e
l a r ge
scale
expansion
of
irrigation
facilities
since
I n d e p e n d e n c e , o n l y o n e- t h i r d o f t h e cr o p p e d ar e a i s
p r o v i d e d b y p e r e n n i a l i r r i g a t i o n a n d t h e r e ma i n i n g t w o t h i r d o f t h e c r o p p e d a r e a h a s t o b e ar t h e br u n t o f t h e
v a g a r i e s o f t h e mo n s o o n s .
5 . Var i e t y o f c rop s :
India is a vast country with varied types of relief,
c l i m a t e a n d s o i l c o n d i t i o n s . Th e r e f o r e , t h e r e i s a l a r ge
variety of crops grown in India. Both the tropical and
t e m p e r a t e c r o p s ar e s u c c e s s f u l l y g r o w n i n I n d i a . Ver y f e w
c o u n t r i e s i n t h e w or l d h a v e a v ar i e t y o f c r o p s c o m p a r a b l e
to that produced in India.
6 . P red o mi n a n c e o f f o o d c rop s :
24

S i n c e I n d i a n a g r i c u l t ur e h a s t o f e e d a l a r ge p o p ul a t i o n ,
p r o d u c t i o n o f f o o d c r o p s i s t h e f i r s t pr i o r i t y o f t h e
f a r me r s a l m o s t e v e r y w h e r e i n t h e c o u n t r y. M o r e t h a n t w o thirds
of
the
total
cropped
area
is
devoted
to
the
c u l t i v a t i o n o f f o o d c r o p s . H o w e v e r, w i t h t h e c h a n g e i n
c r o p p i n g p a t t e r n , t h e r el a t i v e s h a r e o f f o o d c r o p s c a me
down from 76.7 per cent in 1950-51 to 58.8 per cent in
2002-03.
7 . I n s i g n i f i c a n t p l a c e t o g i v e n f o d d e r c rop s :
Al t h o u g h I n d i a h a s t h e l a rge s t p o p ul a t i o n o f l i v e s t o c k
i n t h e w o r l d , f o d d e r c r o p s a r e g i v e n a v er y i n s i g n i f i c a n t
p l a c e i n o ur c r o p p i n g p a t t e r n . O n l y f o u r p e r c e n t o f t h e
r e p o r t i n g a r e a i s d e v o t e d t o p er m a n e n t p a s t u r e s a n d o t h e r
g r a z i n g l a n d s . Th i s i s d u e t o pr e s s i n g d e m a n d o f l a n d f o r
f o o d c r o p s . Th e r e s u l t i s t h a t t h e d o m e s t i c a n i ma l s ar e n o t
p r o p e r l y f e d a n d t h e i r p r o d u c t i v i t y i s v e r y l o w c o mp a r e d
to international standards.
8. Seasonal pattern:
I n d i a h a s t hr e e m a j o r c r o p s e a s o n s .
(i) Kharif season starts with the onset of monsoons and
c o n t i n u e s t i l l t h e b e g i n n i n g o f w i n t e r. M a j o r c r o p s o f t h i s
s e a s o n a r e r i c e , m a i z e , j o w a r, b a j r a , c o t t o n , s e s a m e ,
groundnut and pulses such as moong, urad, etc.
( i i ) R a b i s e a s o n s t a r t s a t t h e b e g i n n i n g o f w i nt e r a n d
c o n t i n u e s t i l l t h e e n d o f w i nt e r o r b e g i n n i n g o f s u m m e r.
25

M a j o r c r o p s o f t h i s s e a s o n a r e w h e a t , b a r l e y, j o w a r, g r a m
and oil seeds such as linseed, rape and mustard.
(iii) Zaid is summer cropping season in which crops like
r i c e , m a i z e , g r o u n d n u t , v e g e t a b l e s a n d f r u i t s ar e g r o w n .
Now some varieties of pulses have been evolved which
c a n b e s u c c e s s f u l l y g r o w n i n s u m m e r.
26
CHAPTER4
AGRICULTUREIN
INDIANECONOMY
AGRICULTUREININDIAN
ECONOMY
INDIASAGRICULTUTRAL
DEVELOPMENTPROBLEM
LACKOFACEESTOCREDIT
27
4.1
AGRICULTURE
IN
THE
NATIONAL
ECONOMY
Ag r i c u l t u r e f o r m s t h e b a c k b o n e o f I n d i a n e c o n o my
despite
concentrated
industrialization
in
the
last
decades; agriculture occupies a place of pride. Being the

l a r ge s t
industry
in
the
c o u n t r y,
a gr i c u l t u r e
provides
e m p l oy m e n t t o a r o u n d 5 o f t h e t o t a l w or k f o r c e i n t h e
c o u n t r y. Th e s i g n i f i c a n c e o f a g r i c u l t u r e i n t h e e c o n o my
can
be
best
explained
by
considering
the
role
of
a g r i c u l t u r e u n d er d i ffe r e n t h e a d s .
1 . S h a re of a g r i c u l t u re i n t o t a l G DP :
Two i mp o r t a n t f a c t s m u s t b e e m p h a s i z e d
here.
F i r s t l y, a g r i c u l t ur e c o n t r i b u t e s e v e n n o w a m a j o r
s h a r e o f n a t i o n a l i n c o me i n I n d i a . S e c o n d l y, t h e
s h a r e o f a g r i c u l t u r e i n n a t i o n a l i n c o m e h o w e v e r, h a s
been on a downward trend and this is being taken up
by
the
manufacturing
and
service
sectors
r e s p e c t i v e l y. I n a r a p i d d e v e l o p i n g c o u n t r y i t i s a s i t
should be.
Comparison can be made between the positions of
agriculture in India with that of other countries as
regards the share of agriculture in national income.
Its seen that more developed the country is, lesser is
t h e s h a r e o f a g r i c u l t ur e i n i t s n a t i o n a l i n c o me t h i s
can be seen from the contributions made in UK, USA,
C a n a d a a n d Au s t r a l i a , w h i c h a r e 2 , 3 , 4 a n d 5 p e r c e n t
r e s p e c t i v e l y. I n d i a h a v i n g n o t y e t r e a c h e d t h e s t a g e
28

o f a n a d v a n c e e c o n o my, h a s a n a g r i c u l t u r a l s e c t o r,
w h i c h i s s t i l l d o mi n a n t o n e i n t h e c o u n t r y.
2 . S h a re of a g r i c u l t u re i n e mp l oy me n t o f t h e c o un t ry
A g r i c u l t ur e d o mi n a t e s t h e I n d i a n e c o n o my t o s u c h a n
extent
that
v er y
high
proportion
of
working
p o p u l a t i o n i n I n d i a i s e n g a g e d i n a gr i c u l t u r e . D a t a
p r o v i d e d by c e n s u s o f I n d i a r e v e a l s t h a t 6 9 % o f t o t a l
m a i n w o r k e r s w e r e e n g a g e d i n a gr i c u l t u r e a n d a l l i e d
activities.
3 . A g r i c u l t u re f o r i n du s t r i a l d e v e l o p me n t
Indian agriculture has been the source of supply of
r a w m a t e r i a l t o o ur l e a d i n g i n d u s t r i e s . C o t t o n a n d
j u t e , t e x t i l e s , s u g a r, p l a n t a t i o n s - a l l t h e s e d i r e c t l y
depend
on
output.
Th e r e
are
many
i n d u s t r i e s , w h i c h d e p e n d o n a g r i c u l t u r e i n d u s t r y.
M a n y o f o ur s ma l l s c a l e a n d c o t t a g e i n d u s t r i e s l i k e
h a n d l o o m s , o i l cr u s h i n g , e t c . d e p e n d o n a g r i c u l t u r e
for their raw materials.
B u t t h e n , i n r e c e n t y e a r s , a g r i c u l t ur e i s l o s i n g i t s
significance to industries such as iron and steel,
engineering,
chemicals,
etc.
H o w e v e r,
in
recent
y e ar s , t h e i mp o r t a n c e o f f o o d pr o c e s s i n g i n d u s t r i e s i s
being increasing recognized both for generation of
i n c o m e a n d g e n e r a t i o n o f e m p l oy m e n t .
4 . A g r i c u l t u re i n i n t e r n at i o n a l t r a d e .
I mp o r t a n c e o f I n d i a n a g r i c u l t ur e s e c t o r a l s o r i s e s
f r o m t h e r o l e i t p l ay s i n I n d i a s t r a d e . Ag r i c u l t u r a l
p r o d u c t s - t e a , s u g a r, o i l s e e d s , t o b a c c o , s p i c e s , e t c .
constitutes
the
main
i t e ms
of
export
in
India.
A g r i c u l t ur a l g o o d s w h i c h a r e e x p o r t e d a mo u n t t o
50%
of
o ur
e x p or t s ,
29
and
manufactures
with

a g r i c u l t u r e c o n t e n t c o n s t i t u t e s a n o t h e r 2 0% . Th e
t o t a l c o m e s t o 7 0% o f I n d i as e x p o r t . Th i s h a s gr e a t
s i g n i f i c a n c e f o r e c o n o m i c d e v e l o p me n t . F or, i n c r e a s e
e x p o r t s h e l p t h e c o u n t r y t o p ay f o r t h e i n c r e a s e
exports of machinery and raw materials
5 . A g r i c u l t u re i n e c o n o mi c p l a n n i n g
I mp o r t a n c e o f a g r i c u l t u r e i n t h e n a t i o n a l e c o n o my i s
i n d i c a t e d by m a n y f a c t s . F o r e . g . a g r i c u l t u r e i s t h e
m a i n s u p p o r t f o r t r a n s p o r t s e c t o r a s r a i l w ay s a n d
r o a d w ay s s e c u r e b u l k o f t h e i r b u s i n e s s f o r m t h e
m o v e me n t o f a g r i c u l t ur a l g o o d s . F ur t h e r i t i s s e e n
t h a t g o o d c r o p s i mp l y i n g l a r ge p u r c h a s i n g p o w e r
with
the
f a r me r s
lead
to
gr e a t e r
d e ma n d
for
manufacturers and therefore better prices. In other

w o r d p r o s p e r i t y o f f a r m e r s i s a l s o t h e pr o s p e r i t y o f
i n d u s t r i e s a n d v i c e v e r s a . Agr i c u l t u r e g r o w t h h a s
d i r e c t i m p a c t o n p o v er t y i r r a d i a t i o n a n d a n i mp o r t a n t
factor
in
containing
inflation,
e m p l oy m e n t
generation, etc.
I t i s c l e a r, t h a t a gr i c u l t u r e i s t h e b a c k b o n e o f t h e
I n d i a n e c o n o my a n d t h e pr o s p e r i t y o f a g r i c u l t ur e c a n
a l s o s t a n d f o r t h e pr o s p e r i t y o f t h e e c o n o m y. At t h e
s a m e t i m e i t s t r u e t h a t t h e pr e c i p i t a t e p r o d u c t i v i t y
i n a g r i c u l t ur e i s l e s s t h a n i n t h e i n d u s t r y. M a n y
s c h o l a r s t hi n g t h a t s o l o n g a s t h e I n d i a n e c o n o my i s
denominated
by
activates
per
capita
income will not rise to an extent, which is necessary

and desirable.
6 . C h a n g i n g s c e n a r i o of r u r a l c red i t
30

I n d i a n r ur a l c r e d i t s t r u c t u r e i s r e t a r d e d a l l o v e r t h e
w o r l d a s q ui t e u n i q u e a n d i n n o v a t i v e e v o l v e d o v er a
period of last 8 decades it can perhaps the owner of
t h e a v er y i m p o r t a n t c o n s t i t u e n t o f t h e m o s t c o m p l e x
r ur a l e c o n o my I t h e t h i r d w o r l d c o u n t r i e s . O n e o f t h e
distinguishing features had been its ability to adapt
i t s e l f w i t h o u t m u c h t u r mo i l a n d s t r e s s , t o t h e s o c i o e c o n o m i c d y n a m i c s o f t h e r ur a l s c e n a r i o . O n e o f t h e
y e ar s i t h a s d e v e l o p e d i n t o a m u l t i - f a c e t e d s t r u c t ur e
t o s e r v i c e a l mo s t t h e e n t i r e c r o s s s e c t i o n o f t h e r ur a l
p o p u l a t i o n s p r e a d t hr o u g h o u t t h e l e n g t h a n d b r e a d t h
of the country
4.2 India's Agriculture Developm ent Problem :

Lack of Access to Credit
I t i s o n e o f t h e m o s t p r e s s i n g i s s u e s t h a t h i n d er I n d i a s
r ur a l p o p u l a t i o n f r o m p r o gr e s s i s t h e l a c k o f a c c e s s
t o c r e d i t . F a r me r s s u i c i d e w i t h i n
the agricultural
sector does not occur as a shocking matter as these poor

c i t i z e n s a r e d e p r i v e d o f m o n e t a r y a s s i s t a n c e w h e n t h e y ar e
most in need.[1]
A f a r m e r s c r i e s f o r h e l p h a v e b e e n i g n or e d a s t h e
d a m a g i n g e ffe c t s f r o m t h e a b s e n c e o f c r e d i t l o a n s t i c k l e s
down
the
population.
Ap a r t
from
the healthcare of
f a r me r, t h e l a c k o f a c c e s s t o c r e d i t a l s o h i g hl y i m p o r t a n t
as almost 80% the farmers own less than a hectare of land.
T h e a v a i l a b i l i t y o f c r e d i t a l l o w s f a r m e r s t o b e pr o t e c t e d
from the inflated costs faced in agriculture and also,
31

improve the quality of fertilizers and hence the output.
S h o u l d t h e d i s t r i b u t i o n o f c r e d i t l o a n s i mp r o v e , t h e I n d i a n
g o v e r n me n t w o u l d a l s o f i n d i t e a sy t o m e e t p r o d u c t i o n
t a r ge t s a n d h a v e a b e t t er c o n t r o l o v e r p r i c e s o f g r a i n s .
Due to the critical shortage of agricultural output, India
h a s t o r e s o r t t o b a n n i n g gr a i n e x p o r t s a n d i n s t e a d , d r i v e
u p i t s i mp o r t b i l l s f r o m w h e a t c o m i n g i n t o t h e c o u n t r y.
There has been so much attention focused on the industrial
and services sector that the agricultural side has been
l a r ge l y n e g l e c t e d . T h e l a c k o f c r e d i t l o a n s c o u p l e d w i t h
i m p r o p er
government
intervention
had
resulted
in
the livelihood of the farmers to go downhill.

As commercial banks are not present in remote locations
o f I n d i a , w h er e a g r i c u l t ur e i s s u p p o s e d t o t h r i v e , i t
b e c o m e s a n i m p o r t a n t l i mi t a t i o n a s t h e r ur a l p o p u l a t i o n
has a strong dependence on it. Co-operative banks which
h a v e b e e n s e t u p pr e v i o u s l y w e r e a l s o d o o m e d t o f a i l a s a
r e s u l t o f b a d l o a n s a n d a l a c k o f f u n d s . Th e s e c o m me r c i a l
banks have their own set of worries, as defaults and crop
f a i l u r e s a r e c o m mo n i n t h e s e c t o r. As s u c h , t h e y p r e f e r
l e n d i n g o u t t o a r e a s w h e r e e a c h f a r me r o w n s a m u c h l a r ge r
p r o p or t i o n
of
land
and
also,
have
better irrigation systems.

H o w e v e r, t h a t d o e s n o t s o l v e t h e p r o bl e m a s t h e s m a l l e r
f a r me r s
(which
unaddressed.
f o r ms
Th e r e
should
majority)
be
issues
r e ma i n s
better banking systems
e s t a b l i s h e d t h a t i s a c c e s s i b l e a n d a ffo r d a b l e t o e v e r y
person.
It
is
obvious
that
32
the
benefits
o f e c o n o mi c

g r o w t h h a v e n o t b e e n e q u a l l y s h a r e d a mo n g a l l a s t h e
access
to
credit
is
not
granted
to
all.
Economic
o p p o r t u n i t i e s o u g h t t o b e c r e a t e d f o r t h e m a rgi n a l i z e d
groups
to
help
in poverty
r e d u c t i o n a n d i n e q u a l i t y p r o b l e ms . F u r t h er a t t e m p t s m a d e
by the government to expand credit loans have ironically
r e s u l t e d i n m o r e c a s e s o f p o v e r t y t h a n e v e r. T h e l a c k o f
a c c e s s t o f o r m a l cr e d i t t h u s p l a c e s m a ny c o n s t r a i n t s o n
agricultural output and also, the standards of living for
the rural population thereby hindering their path to further
economic and social development .
33
CHAPTER5
FUCNTIONSOF
NABARD
5.1 FUNCTIONS OF NABARD

N A B A R D i s a D e v e l o p me n t B a n k w i t h a m a n d a t e f o r
p r o v i d i n g a n d r e g u l a t i n g cr e d i t a n d o t h e r f a c i l i t i e s f o r t h e
p r o mo t i o n a n d d e v e l o p me n t o f a gr i c u l t u r e , s m a l l - s c a l e
34

industries, cottage and village industries, handicrafts and
other rural crafts and other allied economic activities in
r ur a l ar e a s w i t h a v i e w t o p r o mo t i n g i nt e g r a t e d r u r a l
d e v e l o p m e n t a n d s e c u r i n g p r o s p e r i t y o f r u r a l ar e a s , a n d
f o r m a t t e r s c o n n e c t e d t h e r e w i t h o r i n c i d e n t a l t h er e t o .
I n d i s c h a rgi n g i t s r o l e a s a f a c i l i t a t o r f o r r ur a l pr o s p e r i t y,
NABARD is entrusted with
1. Providing refinance to lending institutions in rural
areas
2. Bringing
about
or
p r o mo t i n g
institutional
development and
3. Evaluating,
monitoring
and
inspecting
the
client
banks
Besides this pivotal role, NABARD also:
A c t s a s a c o o r d i n a t o r i n t h e o p e r a t i o n s o f r ur a l c r e d i t
institutions
Extends assistance to the government, the Reserve
B a n k o f I n d i a a n d o t h e r o r ga n i z a t i o n s i n m a t t e r s
relating to rural development
O ffe r s t r a i n i n g a n d r e s e a r c h f a c i l i t i e s f o r b a n k s ,
c o o p e r a t i v e s a n d o r ga n i z a t i o n s w o r ki n g i n t h e f i e l d
o f r ur a l d e v e l o p m e n t
35

H e l p s t h e s t a t e g o v er n m e n t s i n r e a c h i n g t h e i r t a r ge t s
of providing assistance to eligible institutions in
agriculture and rural development
Acts as regulator for cooperative banks and RRBs
Th e f u n c t i o n s o f N A B A R D ar e t o p r o v i d e a s s i s t a n c e t o
a g r i c u l t u r e d e p e n d e n t a n d t o f r a m e , p l a n a n d i mp l e m e n t
p o l i c i e s f o r t h e b e t t er m e n t o f a g r i c u l t ur e s e c t o r i n r e t u r n
h e l p i n g t h e p e o p l e d e p e n d e n t o n a gr i c u l t u r e . Th e m a i n
functions of NABARD are as follows:
36
Functions
Functions ofof
NABARD
NABARD
Financial
Financial
Functions
Functions
Refinance
Refinance
Direct
Direct
Finance
Finance
Developmen
Developmen
tal
tal functions
functions
1.1.
Instituitonal
Instituitonal
2.2. Farm
Farm
sector
sector
37
3.3. Financial
Financial
inclusion
inclusion
Supervisory
Supervisory
functions
functions
4.4. Micro
Micro
credit
credit
5.5. Reserach
Reserach
and
and
Developmen
Developmen
tt
CHAPTER6
FINANCIAL
FUNCTIONSOF
NABARD
REFINANCE
DIRECTFINANCE
Financial functions
6.1Refinance
38
6.1A Short term and medium term loans

M o d e r n a g r i c u l t ur e , a s d i s t i n g u i s h e d f r o m t r a d i t i o n a l
c u l t i v a t i o n , i n v o l v e s s u b s t a n t i a l i n v e s t me n t o f r e c ur r i n g
nature
for
fertilizers,
using
high
insecticides
yielding
and
v ar i e t i e s
costly
of
seeds,
i m p l e me n t s . I n s u c h a s i t u a t i o n , a r r a n g e me n t s f o r c r e d i t
s h o u l d g o m u c h b ey o n d t h e s i m p l e pr o v i s i o n o f c r e d i t a n d
m u s t b e l i n k e d o p e r a t i o n a l l y w i t h pr o d u c t i v i t y a n d o t h e r
services.
Production
and
pr o d u c t i v i t y, m a r k e t i n g
and
r a i s i n g t h e l e v e l o f s u r p l u s a n d s a v i n g s mu s t , t h e r e f o r e ,
b e t h e m a j o r f u n c t i o n s o f c r e d i t . Th e b e n e f i t o f m o d e r n
t e c h n o l o g y,
the
advantages
of
institutional
credit,
i n f r a s t r u c t ur a l a r r a n g e me n t s e t c . , s h o u l d a c c r u e t o a l l
classes of farmers. Besides, on the supply side, there
must be an arrangement for assessing the requirements of
funds on the basis of actual cost and raising the resources
t h e r e f o r e . I t w a s i n t h i s c o n t e x t , t h e c r o p l o a n sy s t e m o r
t h e p r o d u c t i o n o r i e n t e d sy s t e m o f l e n d i n g w a s e v o l v e d
a n d c o n c e i v e d a s t h e m o s t a p p r o pr i a t e m e c h a n i s m f o r
m a s s d i s b u r s e me n t o f pr o d u c t i o n c r e d i t .
P r o d u c t i o n C r e d i t D e p a r t me n t ( P C D ) d e a l s w i t h s h o r t
term refinance facilities, for various types of production,
m a r k e t i n g a n d p r o c ur e m e n t a c t i v i t i e s , b e i n g pr o v i d e d t o
client institutions, as detailed below:
1 . S h o r t Ter m ( S e a s o n a l Ag r i c u l t u r a l O p e r a t i o n s )
39

Refinance
is
provided
for
production
p ur p o s e s
at
c o n c e s s i o n a l r at e o f i n t e r e s t t o S t a t e C o o p e r a t i v e B a n k s
( S C B s ) a n d R e g i o n a l R u r a l B a n k s ( R R B s ) b y w ay o f
s a n c t i o n o f cr e d i t l i mi t s . E a c h w i t h dr a w a l a g a i n s t t h e
s a n c t i o n e d c r e d i t l i mi t i s r e p ay a b l e w i t h i n 1 2 m o n t h s .
2 . S h o r t Ter m R e f i n a n c e t o R R B s , P S B s an d C C B s
( d i rec t l y ) f o r f i n a n c i n g PAC S f o r t h e i r S e a s o n a l
Agricultural Operations
A n e w r e f i n a n c e pr o d u c t f o r f i n a n c i n g o f PAC S t h r o u g h
P S B s & R R B s , w h e r e v e r C o o p e r a t i v e B a n k s ar e w e a k o r
n o t i n a p o s i t i o n t o l e n d t o PAC S a d e q u a t e l y, w a s
i n t r o d u c e d d u r i n g l a s t y ea r. ( 2 0 11- 1 2 )
3 . S h o r t Ter m ( O t h e r s )
T h e S T ( O t h er s ) l i mi t w o u l d c o n s i s t o f d i ffe r e n t p u r p o s e s
v i z . S T- Agr i c u l t u r e a n d Al l i e d Ac t i v i t i e s , S T - M a r k e t i n g
o f c r o p s , S T- F i s h e r i e s S e c t o r s , I n d u s t r i a l C o o p e r a t i v e
S o c i e t i e s ( o t h e r t h a n w e a v e r s ) , S T- L a b o r C o n t r a c t a n d
Forest Labor Cooperative Societies including collection
o f M i n o r F or e s t p r o d u c e . S T- R u r a l a r t i s a n i n c l u d i n g
w e a v e r s m e mb e r s o f PAC S / L A M P S / F S S , S T- P ur c h a s e s ,
S t o c k i n g a n d D i s t r i b u t i o n o f C h e mi c a l F e r t i l i z e r s a n d
o t h e r Agr i c u l t u r a l I n p u t s o n t h e b a s i s o f b a n k w i s e RL P
f o r r e s p e c t i v e p u r p o s e s . Th e l i mi t i s s a n c t i o n e d t o S C B s
and RRBs.
4. MT Conversion.
40

N A B A R D p r o vi d e s r e l i e f t o f a r m e r s w h o s e c r o p s a r e
d a m a g e d d u e t o n a t u r a l c a l a mi t i e s , by w a y o f c o n v e r s i o n
o f c u r r e n t s h o r t t e r m a g r i c u l t ur a l l o a n s i n t o m e d i u m t er m
l o a n s a n d r e p h a s e m e n t / r e s c h e d u l e me n t o f e x i s t i n g M T
( C o n v e r s i o n ) l o a n s . C o n s o l i d a t e d l i mi t w i l l b e s a n c t i o n e d
to RRBs and SCBs in respect of eligible DCCBs
6.1B Long term loans

Investment credit leads to capital formation through
asset
cr e a t i o n .
resulting
in
It
induces
increased
technological
production,
up
gradation
productivity
and
i n c r e me n t a l i n c o m e t o f a r me r s a n d e n t r e pr e n e u r s . Th i s i s a
l o n g - t er m
refinance
f a c i l i t y.
Th e
credit
is
n o r ma l l y
provided for a period of 3 to 15 years. It is intended to

create income generating assets in the following sectors:
1 . A g r i c u l t ur e a n d a l l i e d a c t i v i t i e s
2 . A r t i s a n s , s m a l l s c a l e i n d u s t r i e s , N o n- F a r m S e c t o r
( S ma l l
and
Micro
Enterprises),
handicrafts,
handlooms, powerlooms, etc.

3. Activities of voluntary agencies and self help groups
w o r k i n g a mo n g t h e r ur a l p o o r
o E l i g i b l e I n s t i t u t i on s
T h e I n s t i t u t i o n s E l i gi b l e f o r R e f i n a n c e a r e :
41

1.
S t a t e C o - o p e r a t i v e Ag r i c u l t u r e & R u r a l D e v e l o p me n t
Banks (SCARDBs)
2.
Regional Rural Banks (RRBs)
3.
State Co-operative Banks (SCBs)
4.
Commercial Banks (CBs)
5.
S t a t e Ag r i c u l t ur a l D e v e l o p me n t Fi n a n c e C o m p a n i e s
(ADFCs)
6.
Scheduled
P r i ma r y
Ur b a n
Co-operative
Banks
(PUCBs)
7.
North
East
Finance
C o r p or a t i o n
( NE D F C )
8.
N o n - B a n k i n g F i n a n c i a l C o mp a n i e s ( N B F C s )
o Purposes :
1.
F a r m S e c t or :
A g r i c u l t ur e a n d a l l i e d a c t i v i t i e s s u c h a s m i n o r
irrigation,
development,
sheep/goat
farm
mechanisation,
soil
conservation,
rearing,
p o ul t r y,
land
d a i r y,
p i g g e r y,
p l a n t a t i o n / h o r t i c u l t ur e , f o r e s t r y, f i s h e r y, s t o r a g e
a n d m a r k e t y ar d s , b i o - g a s a n d o t h e r a l t er n a t e
42

sources
of
animals
and
e n e r gy,
s e r i c u l t ur e ,
animal
dr i v e n
apiculture,
carts,
a gr o -
p r o c e s s i n g , a g r o- s e r v i c e c e n t r e s , e t c .
2.
Non-Farm Sector :
Artisans,
S ma l l
&
Micro
Enterprises,
h a n d i c r a f t s , h a n d l o o m s , p o w e r l o o ms , e t c
o
L o a n p e r i od :
Th e l o a n p er i o d i s a m a x i m u m o f 1 5 y e ar s
6.2 DIRECT FINANCE

A . C R E D I T FAC I L I T Y TO F E D E R ATI O N S :
Th e m a r k e t i n g f e d e r a t i o n s a n d c o o p e r a t i v e s a r e
p l a y i n g a v er y i m p o r t a n t r o l e i n a g r i b u s i n e s s a n d
value/supply chain management of the various
a g r i c u l t u r a l c o m m o d i t i e s i n c l u d i n g m i l k . Th e m a j o r
a c t i v i t i e s u n d e r t a k e n by t h e s e i n s t i t u t i o n s a r e
p r o c u r e me n t o f a g r i c u l t u r a l c o m m o d i t i e s i n c l u d i n g m i l k ,
aggregation, storage and value addition in few select
c o m mo d i t i e s l i k e m i l k e t c . a n d m a r k e t i n g . L a r ge n u m b e r
o f f a r m e r s , pr o d u c e r s o rga n i z a t i o n s a n d pr i m a r y
societies depend upon these institutions for marketing
o f t h e i r pr o d u c e a n d f o r v a l u e a d d e d s e r v i c e s l i k e i n p u t
s u p p l y, v a l u e a d d i t i o n a n d s t o r a g e f a c i l i t i e s . Th e
marketing operations by these federations and
c o o p e r a t i v e s r e q u i r e s e a s o n a l a n d t i me l y s h o r t t er m
43

c r e d i t f a c i l i t y t o s u p p o r t t h e i r d a y t o d a y o p er a t i o n s .
B.
RURAL INFRASTRUCTURE
DEVELOPMENT
FUND
Rural
Infrastructure Development
F u n d ( R I D F)
was
instituted in NABARD with an announcement in the

Union Budget 1995-96 with the sole objective of giving
low cost fund support to State Govts. and State Owned
Corporations for quick completion of ongoing projects
relating
to
medium
and
minor
irrigation,
soil
conservation, watershed management and other forms of

r ur a l i n f r a s t r u c t u r e .
C . F I N A N C I N G AN D SU P P O RTI N G P R O D U C E R
O R G A N I S ATI O N S
NABARD
has
taken
an
initiative
for
supporting
p r o d u c e r o rga n i z a t i o n s , a d o p t i n g a f l e x i b l e a p pr o a c h t o
m e e t t h e n e e d s o f p r o d u c e r s . I n or d e r t o g i v e a s p e c i a l
focus,
the
Producers
Development
F u n d ( P O D F ) h a s b e e n s e t u p w e f 0 1 Ap r i l 2 0 11, w i t h
an
initial
corpus
of
50
crore
Any
registered
P r o d u c e r s O r ga n i z a t i o n vi z , Pr o d u c e r s C o m p a n y ( a s
d e f i n e d u n d er S e c 5 8 1 A i n p ar t I X A o f C o m p a n y s Ac t
1956),
Producers
Federations,
Cooperatives,
MACS
(Mutually
44
registered
aided
F ar m e r
cooperative
society),
industrial
c o o p er a t i v e
societies,
other
r e g i s t e r e d f e d e r a t i o n s , PAC S , e t c . s e t u p by pr o d u c e r s
a r e e l i g i b l e u n d e r t h e f u n d . S u p p or t u n d e r P O D F i s
p r o v i d e d a s u n d er :
C r e d i t S u p p or t i s pr o v i d e d f o r f i n a n c i a l i n t er v e n t i o n .
S u p p o r t i n t h e f o r m o f g r a n t , l o a n s , o r a c o mb i n a t i o n o f
these is also available for capacity building & market
interventions.
D . F I N A N C I N G AN D D EV E L O P I N G PAC S I N TO
M U LTI - S E RVI C E C E N T R E S
PAC S b e i n g t h e r e g i s t e r e d c o o p e r a t i v e s o c i e t y h a s
been
pr o v i d i n g
m e mb e r s .
It
credit
has
been
and
other
observed
services
that
to
PAC S
its
are
g e n e r a l l y m e e t i n g o u t t h e c r e d i t r e q u i r e me n t s o f i t s
m e mb e r s . H o w e v e r t h er e i s a n e e d t o pr o v i d e o t h e r
s e r v i c e s t o t h e f a r me r s a n d h e n c e PAC S s h o u l d b e
d e v e l o p e d a s a u n i t t o m e e t a l l t h e i r n e e d s . To e n s u r e
b e t t e r r e t ur n s o n t h e a g r i c u l t ur a l p r o d u c e , t h e f a r me r s
should not only be encouraged to use the latest
t e c h n o l o g y t o i n c r e a s e a gr i c u l t u r a l p r o d u c t i o n b ut
a l s o t o s t o r e t h e i r pr o d u c e i n a s c i e n t i f i c w ay t o
m i n i mi s e s t o r a g e l o s s e s a n d pr o v i d e p l e d g e l o a n t o
bridge credit gap.
I n or d e r t o e n a b l e PAC S t o pr o v i d e m o r e s e r v i c e s t o
45
t h e i r m e mb e r s a n d g e n e r a t e i n c o m e f o r t h e ms e l v e s , a n
i n i t i a t i v e h a s b e e n t a k e n t o d e v e l o p PAC S a s mu l t i
s e r v i c e c e n t r e s . Th i s w i l l e n a b l e PAC S t o p r o v i d e
a n c i l l a r y s e r v i c e s t o i t s m e mb e r s a n d d i v e r s i f y i t s
a c t i v i t i e s . As s i s t a n c e u n d e r P O D F i s a v a i l a b l e t o
S C B / C C B / PAC S f o r t hi s p u r p o s e .
PAC S , b e i n g t h e r e gi s t e r e d c o o p e r a t i v e s o c i e t y, h a s
been
pr o v i d i n g
credit
and
other
services
to
its
m e mb e r s . PAC S a r e g e n e r a l l y pr o v i d i n g t h e f o l l o w i n g
facilities to the members:
i.
Input
facilities
in
form
of
cash
or
kind
c o m p o n e n t t o m e mb e r s .
ii.
iii.
A g r i c u l t ur e i m p l e m e n t s o n h i r i n g b a s i s .
S t o r a g e f a c i l i t y.
S o m e o f t h e PAC S a r e a l s o a s s i s t i n g f a r me r s i n
marketing of their produce. It has been observed that
PAC S
ar e
g e n er a l l y
meeting
out
the
cr e d i t
r e q u i r e me n t s o f i t s m e mb e r s . H o w e v e r t h e r e i s a n e e d
t o pr o v i d e o t h e r s e r v i c e s t o t h e f a r me r s . Th e PAC S
should be developed as a unit for meeting all the
n e e d s o f t h e f a r m e r s . To e n s u r e b e t t e r r e t ur n s o n t h e
a g r i c u l t u r e pr o d u c e , t h e f a r m e r s s h o u l d n o t o n l y b e
e n c o u r a g e d t o u s e t h e l a t e s t t e c h n o l o gy t o i n c r e a s e
a g r i c u l t u r e pr o d u c t i o n b u t a l s o t o s t o r e t h e i r p r o d u c e
46
i n a s c i e n t i f i c w ay t o m i n i m i s e t h e s t o r a g e l o s s e s a n d
provide pledge loan to bridge credit gap.
Wit h t h e d e c r e a s e i n p e r c a p i t a l a n d h o l di n g s i z e o v e r
a p e r i o d o f t i me , i t i s n o t e c o n o mi c a l f o r t h e f a r me r s
t o p ur c h a s e t h e f a r m e q u i p m e n t s . M o r e o v e r m a n y n e w
i n v e n t i o n s h a v e c o m e i n t h e r e c e n t y e ar s i n t h e
agriculture sector which needs to be brought to the
f a r ms . Th e u s e o f t h e n e w t e c h n o l o g y & H Y V w i l l
increase the productivity of the produce.
I t h a s a l s o b e e n o b s e r v e d t h a t m o s t o f t h e f a r me r s g o
i n f o r d i s t r e s s s a l e o f t h e p r o d u c e a s t h ey a r e i n t h e
n e e d o f i m me d i a t e c r e d i t . F u r t h e r a d e q u a t e s t o r a g e
capacity is not available in the rural area where even
the small farmers can store their produce and avail
pledge loan.
47
CHAPTER7
DEVELOPMENTAL
FUNCTIONSOFNABARD
INSTITUIONALDEVELOPMENT
48
FARMSECTOR
FINANCIALINCLUSION
RESEARCHAND
DEVELOPMENT
DEVELOPMENTAL FUNCTIONS
A.
INSTITUTIONAL DEVELOPMENT
I n s t i t u t i o n a l D e p a r t me n t h a s b e e n i n i t i a t i n g v ar i o u s
p r o gr a m m e s
and
initiatives
for
strengthening
of
c o o p e r a t i v e s s i n c e 1 9 8 2 . Th e f o l l o w i n g m a j o r i n i t i a t i v e s
and
supports
are
being
p r o vi d e d
to
Rural
Credit
C o o p e r a t i v e s t o a t t a i n o ur g o a l f o r e v o l v i n g a s u s t a i n a b l e
Rural Financial System to enhance ground level credit
f l o w t o f a r m e r s a n d o t h er s i n r u r a l a r e a s .
B. FARM SECTOR
I.
FARM SECTOR DEVELOPMENTS

FSDD has been recently carved out of the erstwhile
Development
Policy
Department
Farm
S e c t or.
Th e
D e p a r t m e n t ' s c o r e f u n c t i o n i s i mp l e m e n t a t i o n o f v ar i o u s
farm
sector
initiatives
a i me d
at
conservation
and
management of natural resources, accelerating ground

level
credit
flow
by
Rural
49
Fi n a n c i a l
Institutions,

i n c r e me n t a l
pr o d u c t i o n
and
p r o d u c t i v i t y,
g e n e r a t i n g r ur a l e m p l o y m e n t a n d r a i s i n g t h e s t a n d a r d o f
living
of
rural
i m p l e me n t a t i o n
poor
of
through
these
credit
pr o g r a m m e s
and
grant.
evolved
Th e
o v er
p e r i o d o f t i m e t h r o u g h v a r i o u s p o l i cy i n i t i a t i v e s i s t h e
responsibility
operational
of
the
issues
D e p a r t me n t .
e me rgi n g
Dealing
while
with
the
i mp l e m e n t i n g ,
m o n i t o r i n g t h e pr o g r a m m e s a n d pr o v i d i n g f e e d b a c k f o r
p o l i c y f r a mi n g / i mp r o v e m e n t i s a p ar t o f t h e t a s k a s s i g n e d
t o t h e D e p a r t m e n t . Th e i m p o r t a n t t a s k s p o r t f o l i o s h a n d l e d
by FSDD are grouped under four verticals, the details are
furnished below
Major Functional Areas of the Department

Farm Sector Prom otional Fund
O V E RVI E W
Ap p r e c i a t i n g i m p o r t a n c e o f i n n o v a t i o n u n d e r F ar m
S e c t o r,
d i s s e mi n a t i o n
increasing
pr o d u c t i v i t y
and
transfer
of
crops
and
of
t e c h n o l o gy
other
for
farming
activities, DPD supports various initiatives for facilitating

b e t t e r a c c e s s o f f a r me r s t o v a r i o u s a g e n c i e s p r o v i d i n g
i n p u t s , t e c h n o l o gy, cr e d i t , e x t e n s i o n , m a r k e t , e t c , . S u p p o r t
is also provided for facilitating adoption of technologies,
package
of
pr a c t i c e s
by
f a r me r s
by
setting
up
d e m o n s t r a t i o n u n i t s o n r e c e n t t e c h n o l o g i e s . To c a t e r t o
interventions under technology transfer and dissemination
N A B A R D h a s c r e a t e d F a r m Tec h n o l o gy Tra n s f e r F u n d
50

( F T T F ) i n t h e y e a r 2 0 0 8 o u t o f i t s o p e r a t i n g p r o f i t . Th e
c o r p u s u n d e r t h e f u n d s t o o d a t ` . 4 1 c r or e a s o n 0 1 Ap r i l
2 0 1 4 . As o n 3 0 . 0 9 . 2 0 1 4 , a s s i s t a n c e o f ` 1 3 . 4 4 c r or e w a s
disbursed for various interventions under FTTF taking the
cumulative
d i s b u r s e me n t
to `187.89
c r or e . Var i o u s
a c t i v i t i e s b e i n g s u p p o r t e d u n d e r F T T F ar e a s f o l l o w s :
1. Holistic
of
Vil l a g e s
through
Vil l a g e
Development Programme (VDP)

2 . P i l o t P r o j e c t o n Au g m e n t i n g Pr o d u c t i v i t y o f L e a d
Crops
3 . P i l o t P r o j e c t o n S y s t e m o f R i c e I n t e n s i f i c a t i o n ( S RI )
4 . S u p p o r t u n d e r P i l o t P r o j e c t f o r Tec h n o l o g y Tra n s f e r,
Credit
Counselling
and
Market
Ad v o c a cy
through
F a r me r s C l u b s ( M a s t e r F a r me r s )
5 . S u p p o r t t o F ar m e r s ' Tra i n i n g a n d R u r a l D e v e l o p m e n t
Centres (FTRDCs)
6. Support
for
Capacity
Building
for
Ad o p t i o n
of
Tec h n o l o gy ( C AT)
7 . F a r me r s ' C l u b P r o g r a m m e
Producers
Organisation
(PODF)
51
Development
Fund

P rod u c e r s o r g a n i s a t i o n a l d e v e l o p me n t f u n d s
NABARD has taken an initiative for supporting
p r o d u c e r o rga n i z a t i o n s , a d o p t i n g a f l e x i b l e a p pr o a c h t o
m e e t t h e n e e d s o f p r o d u c e r s . I n or d e r t o g i v e a s p e c i a l
focus,
the
Producers
O rga n i z a t i o n
Development
F u n d ( P O D F ) h a s b e e n s e t u p w e f 0 1 Ap r i l 2 0 11, w i t h a n
i n i t i a l c or p u s o f 5 0 c r or e . Any r e g i s t e r e d Pr o d u c e r s
O r ga n i z a t i o n v i z , P r o d u c e r s C o mp a ny ( a s d e f i n e d u n d e r
S e c 5 8 1 A i n p a r t I X A o f C o mp a ny s Ac t 1 9 5 6) , Pr o d u c e r s
Cooperatives,
(Mutually
registered
aided
F a r me r
cooperative
Federations,
society),
MACS
industrial
c o o p e r a t i v e s o c i e t i e s , o t h er r e gi s t e r e d f e d e r a t i o n s , PAC S ,
e t c . s e t u p by p r o d u c e r s ar e e l i g i b l e u n d er t h e f u n d .
S u p p o r t u n d er P O D F i s pr o v i d e d a s u n d e r :
C r e d i t S u p p or t i s pr o v i d e d f o r f i n a n c i a l i n t er v e n t i o n .
S u p p o r t i n t h e f o r m o f g r a n t , l o a n s , o r a c o mb i n a t i o n o f
these is also available for capacity building & market
interventions.
S i n c e m o s t o f t h e P r o d u c e r s O rga n i s a t i o n s ar e h a v i n g
low capital base, scope for NABARD's intervention under
PODF
has
been
enhanced
to
support
Pr o d u c e r s
O r ga n i s a t i o n s f o r c o n t r i b u t i o n t o s h a r e c a p i t a l .
1. Introduction
A . I n d i a n p r o d u c e r s a r e u n a b l e t o r e a l i z e o p t i ma l v a l u e
from their
p r o d u c e a n d p r o gr e s s f u r t h er
52
due
to

fragmentation
of
o r ga n i z a t i o n .
India
households
of
land
holdings
has
which
over
o v er
and
12.5
85%
lack
cr o r e
are
of
f a r me r
small
and
m a rgi n a l f a r m e r s w i t h l a n d h o l d i n g s o f l e s s t h a n 2
h e c t a r e s . Th e a v e r a g e s i z e o f l a n d h o l d i n g i s 1 . 3 3
h e c t a r e / f a r me r h o u s e h o l d . D u e t o t h i s f r a g me n t a t i o n
a n d d i s o r ga n i z a t i o n , i t i s n o t e c o n o mi c a l l y v i a b l e f o r
t h e f a r m e r s n o t o n l y t o a d o p t l a t e s t t e c h n o l o gy b u t
a l s o t o u s e h i g h y i el d i n g v a r i e t i e s o f i n p u t s l i k e
s e e d s a n d f e r t i l i z e r s . Th e y ar e a l s o u n a b l e t o r e a l i z e
good
value
from
their
marketable
surplus
by
individually selling their produce.

B. On
the
other
hand
in
case
of
non-farm
sector
a c t i v i t i e s , t h e h a n d l o o m w e a v e r s & ar t i s a n s a r e n o t
a b l e t o c o m p e t e w i t h t h e i r pr o d u c t s i n t h e m a r k e t d u e
to poor quality & obsolete designs.
C. Through
better
o r ga n i z a t i o n , p r o d u c e r s
can
utilize
s c a l e t o p r o c ur e i n p ut s a t a l o w e r p r i c e , a n d g a i n
more
selling
power
for
their
p r o d u c e / pr o d u c t .
F o r mi n g a pr o d u c e r o rga n i z a t i o n c a n a l s o p r o v i d e
a c c e s s t o t i me l y a n d a d e q u a t e f i n a n c e , b u i l d c a p a c i t y
and provide linkages to markets.
D. NABARD has, therefore, decided to set up a separate
fund
titled
"Producers
Development
Fund" (PODF) to tackle the issues of non availability

o f t i me l y c r e d i t , c a p a c i t y b u i l d i n g o f pr o d u c e r s &
s t r e n g t h e n i n g o f t h e Pr o d u c e r s O r ga n i z a t i o n s a n d
53

market
tie-ups.
Th e
Fund
has
been
created
in
N A B A R D w i t h a n i n i t i a l c o r p u s o f 5 0 cr o r e s f r o m o u t
o f i t s o p e r a t i n g s u r p l u s f o r t h e y e a r 2 0 1 0- 11.
2. Objectives of the Fund

P r o d u c e r s O r ga n i z a t i o n D e v e l o p me n t F u n d ( P O D F )
w i l l b e u s e d t o s u p p o r t Pr o d u c e r s O rga n i z a t i o n s
across three levers, viz. credit support, capacity
b u i l d i n g & m a r k e t l i n k a g e . Th e o b j e c t i v e o f t h e f u n d
i s t o m e e t e n d t o e n d r e q u i r e m e n t s o f Pr o d u c e r s
O r ga n i z a t i o n a s w e l l a s t o e n s u r e t h e i r s u s t a i n a b i l i t y
& e c o n o m i c vi a b i l i t y.
1 3 . Guiding Princ iple
2 T h e g u i d i n g pr i n c i p l e s f o r t h e o p e r a t i o n o f P O D F ar e
broadly as indicated below:
o P r o d u c e r s O rga n i z a t i o n r e g i s t e r e d u n d e r a n y S t a t u t e
o f L a w ar e e l i g i bl e .
o The
activities
may
fall
within
the
domain
of
a g r i c u l t u r e , a l l i e d s e c t o r s & N o n F ar m S e c t o r o n l y.
o P r o d u c e r s O r ga n i z a t i o n s h o u l d b e f o r m e d b y t h e
p r i ma r y pr o d u c e r s o f a g r i c u l t ur e & NF S a c t i v i t i e s .
54

o T h e a c t i v i t i e s e l i g i bl e t o b e f u n d e d s h o u l d r e l a t e t o
production
and/or
ot h e r
related
activities
like
h a r v e s t i n g , s t o r a g e , pr o c e s s i n g , p a c k a g i n g a n d / or
m a r k e t i n g o f t h e p r o d u c e / pr o d u c t or i n c o m b i n a t i o n
of the above activities.
o T h e f u n d w i l l b e u s e d f o r pr o v i d i n g l o a n t o c a r r y o u t
the economic activity and mix of grant and loan for
capacity building market linkages.
o The
Fund
could
also
be
used
for
developing
p r o d u c e r s o r ga n i z a t i o n t hr o u g h n e c e s s a r y c a p a c i t y
building
o T h e a c t i v i t y s h o u l d r e s u l t i n p r o d u c t i m p r o v e me n t
a n d / o r i n c r e a s e i n pr o d u c t i o n .
o The proposals should lead to creation of sustainable
e m p l oy m e n t o p p o r t u n i t i e s ( d i r e c t / i n d i r e c t ) . P o l i c y
goal
is
to
i mp r o v e
r ur a l
livelihoods
t hr o u g h
c o m mu n i t y b a s e d a n d s u s t a i n a b l e i n t e r v e n t i o n s
o T h e P r o d u c e r s O rga n i z a t i o n w i l l a c t f o r t h e b e n e f i t
of the producers.
o T h e s h a r e s o f t h e pr o d u c e r s c a n n o t b e s o l d t o n o n
p r o d u c e r s a t a n y t i me . I f e x i s t i n g m e mb e r d e s i r e t o
leave
the
purchased
o rga n i s a t i o n ,
either
by
his
shares
existing
e n r o l l i n g a n e w p r i ma r y p r o d u c e r.
55
can
producers
only
be
or
by

o P r o- p o o r ( i m p r o v e s e mp l o y me n t , r e d u c e s p o v e r t y,
i m p r o v e s a c c e s s t o c r e d i t , i n f o r ma t i o n , e n t i t l e me n t s )
o Community
participation
(ownership/
management/empowerment)
o Integrated
approach
(need-based
and
flexible,
c o n v e r ge n c e w i t h o t h e r s c h e m e s / p r o gr a m me s )
F i n an c i n g a n d D e v e l o p i n g PACS i nt o mu l t i - s e r v i c e
c e n t re
PAC S b e i n g t h e r e gi s t e r e d c o o p e r a t i v e s o c i e t y h a s b e e n
p r o v i d i n g cr e d i t a n d o t h er s e r v i c e s t o i t s m e m b e r s . I t h a s
b e e n o b s e r v e d t h a t PAC S a r e g e n e r a l l y m e e t i n g o u t t h e
credit requirements of its members. However there is a
n e e d t o pr o v i d e o t h e r s e r v i c e s t o t h e f a r m e r s a n d h e n c e
PAC S s h o u l d b e d e v e l o p e d a s a u n i t t o m e e t a l l t h e i r
needs.
To
ensure
better
returns
on
the
agricultural
p r o d u c e , t h e f a r me r s s h o u l d n o t o n l y b e e n c o u r a g e d t o u s e
t h e l a t e s t t e c h n o l o gy t o i n c r e a s e a g r i c u l t u r a l p r o d u c t i o n
but also to store their produce in a scientific way to
m i n i mi s e s t o r a g e l o s s e s a n d pr o v i d e p l e d g e l o a n t o br i d g e
credit gap.
I n o r d e r t o e n a b l e PAC S t o pr o v i d e m o r e s e r v i c e s t o t h e i r
m e mb e r s a n d g e n e r a t e i n c o me f o r t h e m s e l v e s , a n i n i t i a t i v e
h a s b e e n t a k e n t o d e v e l o p PAC S a s m u l t i s e r v i c e c e n t r e s .
T h i s w i l l e n a b l e PAC S t o p r o v i d e a n c i l l a r y s e r v i c e s t o i t s
56

m e mb e r s a n d d i v er s i f y i t s a c t i v i t i e s . As s i s t a n c e u n d er
P O D F i s a v a i l a b l e t o S C B / C C B / PAC S f o r t h i s p ur p o s e .
PAC S , b e i n g t h e r e g i s t e r e d c o o p e r a t i v e s o c i e t y, h a s b e e n
p r o v i d i n g c r e d i t a n d o t h e r s e r v i c e s t o i t s m e mb e r s . PAC S
are generally providing the following facilities to the
m e mb e r s :
i.
I n p u t f a c i l i t i e s i n f o r m o f c a s h or k i n d c o m p o n e n t
t o m e mb e r s .
ii.
iii.
A g r i c u l t ur e i m p l e m e n t s o n h i r i n g b a s i s .
S t o r a g e f a c i l i t y.
S o m e o f t h e PAC S a r e a l s o a s s i s t i n g f a r m e r s i n m a r k e t i n g
o f t h e i r pr o d u c e . I t h a s b e e n o b s e r v e d t h a t PAC S ar e
generally meeting out
the credit
r e q u i r e me n t s o f i t s
m e mb e r s . H o w e v e r t h er e i s a n e e d t o p r o v i d e o t h e r
s e r v i c e s t o t h e f a r m e r s . Th e PAC S s h o u l d b e d e v e l o p e d a s
a u n i t f o r m e e t i n g a l l t h e n e e d s o f t h e f a r m e r s . To e n s u r e
b e t t e r r e t u r n s o n t h e a g r i c u l t ur e pr o d u c e , t h e f a r m e r s
should not only be encouraged to use the latest technology
t o i n c r e a s e a g r i c u l t ur e p r o d u c t i o n b u t a l s o t o s t o r e t h e i r
p r o d u c e i n a s c i e n t i f i c w ay t o m i n i m i s e t h e s t o r a g e l o s s e s
and provide pledge loan to bridge credit gap.
Wit h t h e d e c r e a s e i n p e r c a p i t a l a n d h o l di n g s i z e o v e r a
p e r i o d o f t i m e , i t i s n o t e c o n o mi c a l f o r t h e f a r m e r s t o
purchase
the
farm
e q u i p me n t s .
Moreover
many
new
i n v e n t i o n s h a v e c o m e i n t h e r e c e n t y e ar s i n t h e a g r i c u l t u r e
57

s e c t o r w h i c h n e e d s t o b e br o u g h t t o t h e f a r ms . Th e u s e o f
t h e n e w t e c h n o l o gy & H Y V w i l l i n c r e a s e t h e p r o d u c t i v i t y
of the produce.
I t h a s a l s o b e e n o b s e r v e d t h a t m o s t o f t h e f a r me r s g o i n
f o r di s t r e s s s a l e o f t h e p r o d u c e a s t h ey a r e i n t h e n e e d o f
i m me d i a t e c r e d i t . F u r t h e r a d e q u a t e s t o r a g e c a p a c i t y i s n o t
a v a i l a b l e i n t h e r ur a l a r e a w h er e e v e n t h e s m a l l f a r me r s
can store their produce and avail pledge loan.
PAC S c a n p l ay a n i m p o r t a n t r o l e i n pr o v i d i n g t h e s e
facilities
to
the
farmers.
To i n c r e a s e
the
business
p o r t f o l i o o f PAC S s o a s t o m a k e i t a s e l f s u s t a i n a b l e
e n t i t y, i t i s e s s e n t i a l t h a t t h e PAC S s h o u l d p r o v i d e
additional
services
like
providing
i m p l e me n t s o n h i r i n g b a s i s , e n a b l i n g c o l l e c t i v e p ur c h a s e
of inputs, having good quality storage capacity as per
N e g o t i a b l e War e h o u s e R e c e i p t S y s t e m, e t c .
A c c o r d i n g l y, t h e f o l l o w i n g f a c i l i t i e s c a n b e t a k e n u p by
PAC S t o t h e f a r me r s :
1 . A g ro- S t o r a g e c e n t re:
Upgradation of the existing storage facility or
construction of new godown along with sorting/
g r a d i n g u n i t a s p e r N e g o t i a b l e War e h o u s e R e c e i p t
S y s t e m. Th i s w i l l e n a b l e t h e m t o i s s u e w a r e h o u s e
r e c e i p t s . B a s e d o n t h e s e r e c e i p t s , t h e f a r me r s c a n
58

get loan against the crop stored and can cultivate
t h e n e x t c r o p . Th u s t h e f a r m e r s w i l l b e f a c i l i t a t e d
t o g e t b e t t e r pr i c e by h o l d i n g t h e c r o p s w i t h o u t
a ffe c t i n g t h e f u n d f l o w p o s i t i o n .
2 . A g ro- s e r v i c e C e nt re:
P u r c h a s e o f h i - t e c h a gr o - i mp l e m e n t s l i k e p o w e r
t i l l e r, l a n d l e v e l e r, r o t a r y s l a s h e r, m o v e r s , s e e d
d r i l l e r,
multi
crop
p l a n t e r,
paddy
t r a n s p l a n t e r,
s p r a y er s , c o mb i n e h a r v e s t e r e t c . d e p e n d i n g u p o n
t h e r e q u i r e me n t s o f m e m b e r s . Th e e a r n i n g w i l l b e
f r o m t h e r e n t a l o f t h e s e e q u i p me n t s .
3 . A g r i - p roc e s s i n g c e nt re:
P r i ma r y
Processing:
S or t i n g ,
grading
unit,
w a x i n g / p o l i s h i n g u n i t , p r e - c o o l i n g c h a mb e r s ,
etc.
S e c o n d a r y P r o c e s s i n g : Val u e a d d i t i o n t o p r o d u c e
e.g.
Mini
rice
mi l l ,
attachaki,
h or t i c u l t u r e
produce processing etc.

4 . A g r i - i n f o r ma t i o n c e nt re :
Tes t i n g l a b f o r s o i l & w a t e r, c r e a t i n g p a n e l o f
e x p e r t s f o r pr o v i d i n g s e r v i c e s o n p a y m e n t b a s i s ,
k n o w l e d g e d i s s e mi n a t i o n c e n t r e , a r r a n g e t r a i n i n g
t o f a r me r s . Th e t e s t i n g l a b & e x p e r t g u i d a n c e w i l l
59

be available to farmers at a cost.
5 . A g r i - Tra n s p o r t a t i on & M a r ke t i n g F a c i l i t i e s :
P r o c ur e m e n t o f p r o d u c e , D i r e c t m a r k e t l i n k a g e
after aggregation and/ or processing, setting up of
r ur a l m a r t e t c . Th e PAC S , w h i c h a r e e i t h e r i n t h e
a r e a o f m a r k e t i n g or i n t e n d t o u n d e r t a k e t h i s
a c t i v i t y, m a y c r e a t e t h i s c h a n n e l t o f a c i l i t a t e t h e
f a r me r s i n m a r k e t i n g .
Watershed development programs

Watershed Development Fund
1. Genesis
T h e U n i o n F i n a n c e M i n i s t e r, i n hi s b u d g e t s p e e c h
f o r 1 9 9 9- 2 0 0 0 h a d a n n o u n c e d t h e c r e a t i o n o f a
Wat e r s h e d D e v e l o p m e n t F u n d ( W D F) i n N a t i o n a l
Bank
for
Ag r i c u l t ur e
and
Rural
Development
( N A B A R D ) w i t h br o a d o b j e c t i v e s o f u n i f i c a t i o n o f
m u l t i p l i c i t y o f w a t er s h e d d e v e l o p m e n t p r o g r a m m e s
into
single
national
initiative
through
i n v o l v e m e n t o f v i l l a g e l e v e l i n s t i t u t i o n s a n d PFAs .
I n p ur s u a n c e t h e r e o f , WD F h a s b e e n c r e a t e d i n
NABARD with a contribution of
100 crore each
b y M i n i s t r y o f Ag r i c u l t ur e , G o v e r n me n t o f I n d i a
(GoI) and NABARD.
60
2. Objectives
The objective of the Fund is to spread the message
o f p a r t i c i p a t o r y w a t e r s h e d d e v e l o p m e n t . Th e F u n d
w i l l b e u t i l i s e d t o cr e a t e t h e n e c e s s a r y f r a m e w o r k
conditions to replicate and consolidate the isolated
s u c c e s s f u l i n i t i a t i v e s u n d e r d i ffe r e n t pr o g r a m m e s
in
the
g o v e r n me n t ,
s e mi - g o v er n m e n t
and
NGO
s e c t o r s . Th e r e b y, a l l t h e p a r t n e r s i n v o l v e d v i z . ,
w a t e r s h e d c o m mu n i t y, c e n t r a l a n d s t a t e g o v e r n me n t
departments,
banks,
agricultural
research
institutions, NGOs and NABARD can act in concert

to make a breakthrough in participatory watershed
development.
WD F
operationalised
in
is
close
proposed
coordination
to
be
with
the
C e n t r a l a n d St a t e M i n i s t r i e s a s a c o n t i n u u m o f
t h e i r e ffo r t s b u t w i t h a d i s t i n c t i d e n t i t y.
3 . I mp a c t o f w a t e r s h e d d e v e l o p me n t p rog r a m
Wat e r s h e d D e v e l o p me n t P r o j e c t s i mp l e m e n t e d by
NABARD
has
resulted
in
creation
replicable
models of participatory watershed development has

helped in augmentation of natural resources and
i m p r o v e me n t
c o m mu n i t i e s .
in
livelihood
Major
i mp a c t
of
of
watershed
the
watershed
i m p l e me n t a t i o n i n v a r i o u s p r o gr a m m e s a s o b s e r v e d
based
on
i mp a c t
evaluation
61
studies
are
given
below:
Rise in ground water level
Drinking
water
scarcity
in
villages
has
been
overcome
Local
e mp l o y me n t
generation
has
i mp r o v e d ,
r e d u c i n g o ff s e a s o n m i g r a t i o n
Increase
in
a gr i c u l t u r a l
pr o d u c t i v i t y
and
p r o d u c t i o n - m a i z e ( 2 8 % ) , j o w a r / b a j r a ( 5 0% ) ,
g r o u n d n u t ( 1 8 % ) , p ul s e s ( 3 6 t o 4 2 % )
Dairy activity has received a fillip
Demand
potential
for
credit
has
gone
up
(estimated
6 4 2 0 c r o r e)
Wome n e m p o w e r me n t a n d r e d u c t i o n i n dr u d g e r y ;
l a r ge n u mb e r o f w o me n S H G s f o r me d a n d c r e d i t
linked (about 12840 SHGs)
S e c o n d a r y i mp a c t i mp r o v e d h o u s i n g , h e a l t h a n d
education (schools)
62
II. Farm sector policy development

F a r m S e ct o r P ol i c y D e p a rt me n t ( F SP D ) .
F a r m S e c t o r P o l i c y D e p a r t me n t ( F SP D ) i s c a r v e d o u t o f
the
erstwhile
P o l i cy
D e p a r t me n t
with
p r i ma r y f o c u s o n f o r mu l a t i o n o f a p p r o pr i a t e p o l i c i e s
concerning agriculture and allied sector activities, natural
resources management, climate change, etc., within the
o v e r a l l p ol i c y f r a m e w o r k o f G o v e r n m e n t o f I n di a . Th e
i m p o r t a n t o b j e c t i v e s o f t h e p o l i c i e s a r e t o w ar d s d r a w i n g
a p p r o p r i a t e o p e r a t i o n a l g u i d e l i n e s f o r i m p l e me n t a t i o n o f
such
policies
through
credit,
pr o m o t i o n a l
and
d e v e l o p m e n t a l i nt e r v e n t i o n s . Tow a r d s t h e s e o b j e c t i v e s ,
t h e D e p a r t me n t i s a l s o r e n d e r i n g n e c e s s a r y t e c h n i c a l
a d v i s o r y s e r v i c e s i n a g r i c u l t ur e a n d a l l i e d s e c t o r s t h r o u g h
C e n t r a l a n d R e g i o n a l Tec h n i c a l Ad v i s o r y G r o u p s ( C - TAG
a n d R - TAG s ) .
C. Financial inclusion
I n d i a n e c o n o my i n g e n e r a l a n d b a n k i n g s e r v i c e s i n
p a r t i c u l a r h a v e m a d e r a pi d s t r i d e s i n t h e r e c e n t p a s t .
H o w e v e r, a s i z e a b l e s e c t i o n o f t h e p o p u l a t i o n , p ar t i c u l a r l y
the vulnerable groups, such as weaker sections and low
income groups, continue to remain excluded from even the
m o s t b a s i c o p p o r t u n i t i e s a n d s e r v i c e s p r o vi d e d b y t h e
63

f i n a n c i a l s e c t o r. I n or d e r t o a d d r e s s t h e i s s u e s o f f i n a n c i a l
inclusion,
the
G o v e r n me n t
Committee
on
Chairmanship
of
submitted
its
Financial
Dr.
C.
of
India
Inclusion
Rangarajan.
f i n a l r e p or t t o
constituted
Hon'ble
Th e
under
a
the
Committee
Union
Finance
Minister on 04 January 2008.

Th e C o m m i t t e e o n F i n a n c i a l I n c l u s i o n h a s d e f i n e d
F i n a n c i a l I n c l u s i o n a s " t h e pr o c e s s o f e n s u r i n g a c c e s s t o
f i n a n c i a l s e r v i c e s a n d t i me l y a n d a d e q u a t e c r e d i t w h e r e
needed by vulnerable groups such as weaker sections and
l o w i n c o m e g r o u p s a t a n a ffo r d a b l e c o s t .
C o re B u s i n e s s o f D e p a rt me n t
Th e c or e a c t i v i t i e s o f t h e D e p a r t me n t a r e t o c a r r y
forward the agenda of financial inclusion of the excluded
population at the national level as per the framework
described by the Report of the Committee on Financial
I n c l u s i o n i n g e n e r a l a n d o p e r a t i o n a l i s i n g t h e Fi n a n c i a l
I n c l u s i o n F u n d ( F I F ) a n d F i n a n c i a l I n c l u s i o n Tec h n o l o g y
F u n d ( F I T F ) , i n p ar t i c u l a r. Th e i m p l e me n t a t i o n i s u n d er
t h e g u i d a n c e o f t h e t w o Ad v i s o r y B o a r d s s e t u p f o r F I F
a n d F I T F r e s p e c t i v e l y.
D. Research and development

E s t a b l i s h e d by t h e B a n k , i n a c c o r d a n c e w i t h t h e
p r o v i s i o n s o f t h e N A B A R D Ac t 1 9 8 1 , t h e R e s e a r c h a n d
Development (R&D) Fund aims at acquiring new insights
64

i n t o t h e p r o b l e ms o f a g r i c u l t ur a l a n d r u r a l d e v e l o p m e n t
t h r o u g h i n- d e p t h s t u d i e s a n d a p p l i e d r e s e a r c h a n d t r y i n g
o u t i n n o v a t i v e a p p r o a c h e s b a c k e d u p by t e c h n i c a l a n d
economic
studies.
formulating
Th e
policies
on
R&D
Fund
matters
of
is
ut i l i s e d
i mp o r t a n c e
for
to
a g r i c u l t u r a l o p er a t i o n s a n d r ur a l d e v e l o p m e n t , i n c l u d i n g
f a c i l i t i e s f o r t r a i n i n g , d i s s e mi n a t i o n o f i n f o r ma t i o n a n d
p r o mo t i o n o f r e s e a r c h b y u n d er t a k i n g t e c h n o - e c o n o mi c
s t u d i e s a n d o t h e r s u r v e y s i n t h e f i e l d s o f a g r i c u l t u r e , r ur a l
b a n k i n g a n d r u r a l d e v e l o p me n t . C o r p u s o f t h e R & D F u n d
is
5 0 c r or e .
Grant support for:

o Research projects and studies.
o International,
National
and
Regional
Seminars/
C o n f e r e n c e s / S y mp o s i a , Wor k s h o p s , e t c .
o Occasional Papers and cost of other publications.
o Chair Units.
o Providing
training
for
personnel
of
constituent
banks.
o S u m m e r I n t e r n s h i p P r o gr a m m e .
Tra i n i n g I n s t i t u t e s S up p o r t e d U n d e r R& D F un d
CAB, Pune,
65

B I R D , L u c k n o w, M a n g a l o r e & B o l p u r
IIBM, Guwahati
National
Institute
of
Rural
Banking
( NI R B ) ,
Bangalore
CHAPTER8
SUPERVISORY
FUNCTIONS
FUNCTIONS
OBJECTIVESOFSUPERVISION
PROCESS
66
SUPERVISROY FUNCTIONS
S e c t i o n 3 5( 6 ) o f t h e B a n k i n g R e g u l a t i o n Ac t , 1 9 4 9 ,
empowers
NABARD
to
conduct
inspection
of
State
Cooperative Banks (SCBs), Central Cooperative Banks

(CCBs) and Regional Rural Banks (RRBs). In addition,
NABARD has also been conducting periodic inspections of
state
level
cooperative
institutions
such
as
State
C o o p e r a t i v e Ag r i c u l t ur e a n d R u r a l D e v e l o p m e n t B a n k s
(SCARDBs),
Ap e x
Wea v e r s
Societies,
Marketing
Federations etc., on a voluntary basis.
8.1
O b j e c t i v e s o f Su p e r v i s i o n
To pr o t e c t t h e i n t e r e s t o f t h e pr e s e n t a n d f u t u r e
depositors.
To e n s u r e t h a t t h e b u s i n e s s c o n d u c t e d by t h e s e b a n k s
i s i n c o n f o r mi t y w i t h t h e p r o v i s i o n s o f t h e r e l e v a n t
A c t s / R u l e s , r e g u l a t i o n s / By e - L a w s .
67

To e n s u r e
observance
formulated
and
of
issued
rules,
by
guidelines,
NABARD
etc.,
RBI/
Government.
To e x a m i n e t h e f i n a n c i a l s o u n d n e s s o f t h e b a n k s a n d
To s u g g e s t w a y s a n d m e a n s f o r s t r e n g t h e n i n g t h e
i n s t i t u t i o n s s o a s t o e n a b l e t h e m t o p l ay m o r e
e ffi c i e n t r o l e i n p u r v ey i n g r u r a l c r e d i t .
8.2
S u p e r v i s o r y p roc e s s
(i)
O n - S i t e I n s p e c t i on
Onsite inspection of banks is carried out on a
periodic
basis.
Besides
r e gi o n a l / c o n t r o l l i n g
the
o ffi c e s
Head
and
some
O ffi c e ,
certain
branches
are
c o v e r e d d u r i n g i n s p e c t i o n s o a s t o e n s u r e a mi n i mu m
coverage of advances.
Th e O n- S i t e I n s p e c t i o n f o c u s e s o n s o l v e n c y, l i q u i d i t y
a n d o p e r a t i o n a l h e a l t h o f t h e b a n k . Wh i l e t h e c o mp l i a n c e
to the inspection findings is followed up in the usual
course, NABARD addresses supervisory letters to the
m a n a g e me n t o f t h e b a n k s , St a t e G o v e r n me n t , s p o n s o r
bank, etc., highlighting the major areas of supervisory
concern
that
need
immediate
rectification,
holds
supervisory discussions to draw up an action plan, that

c a n b e m o n i t o r e d . Al l t h e i n s p e c t e d b a n k s a r e r a t e d a s
68

per supervisory rating based on CAMELSC concept.
(ii)
S u p p l e me n t a ry Ap p r a i s a l
Supplementary
Ap p r a i s a l / P o r t f o l i o
Studies
ar e
also
u n d e r t a k e n b y N A B A R D , w h er e v e r w a r r a n t e d .
(iii)
O f f - S i t e S u r v e i l l a n c e an d M o n i t o r i n g
As a p a r t o f t h e n e w s t r a t e gy o f s u p e r v i s i o n , a sy s t e m
of
` O ff- s i t e
Surveillance'
has
been
introduced
as
supplementary tool to on-site inspection. Its objectives are

to obtain and analyse critical data on a continuous basis,
t o i d e n t i fy a r e a s o f s u p e r v i s o r y c o n c e r n a n d t o i s s u e e a r l y
w a r n i n g s i g n a l s o n r i s k y a r e a s r e q u i r i n g f u r t h e r a c t i o n by
b a n k s . Th e s y s t e m b a s i c a l l y e n v i s a g e s d e s k s c r u t i n y o f
operations of Cooperative Banks and RRBs through a set
of
statutory
and
non-statutory
r e t ur n s .
Wh i l e
the
p e r i o d i c a l s t a t u t o r y o n - s i t e i n s p e c t i o n s a t t e m p t a n o v er a l l
e v a l u a t i o n o f t h e p e r f o r ma n c e o f t h e b a n k s w i t hi n a
stipulated
period,
o ff- s i t e
surveillance
envisages
continuous supervision, which will supplement the on-site

inspections.
69
CHAPTER 9
70
ACHIVEMENTS OF
NABARD
ACHIEVEMENTS OF NABARD:
NABARD has been performing in the positive side
s i n c e i t s i n c e p t i o n i n t h e e n d o f t h e f i n a n c i a l y e ar o n
M a r c h 2 0 11 t h e t o t a l pr o d u c t i o n cr e d i t d i s b u r s e d w a s R s .
3 4 1 9 6 c r o r e . F or t h e y e ar o f 2 0 1 0 - 2 0 11 t h e r e f i n a n c e
d i s b u r s e m e n t u n d e r t h e I n v e s t me n t C r e d i t t o c o m m e r c i a l
banks,
state
cooperative
banks,
state
cooperative
a g r i c u l t u r e a n d r u r a l d e v e l o p me n t b a n k s , R R B s a n d o t h e r
e l i g i b l e f i n a n c i a l i n s t i t u t i o n w a s R s . 1 3 4 8 5 . 8 7 c r or e
Th e R u r a l I n f r a s t r u c t ur e D e v e l o p m e n t F u n d ( RI D F ) R s .
12060.04
cumulative
c r or e s
was
a mo u n t
of
di s b u r s e d
d ur i n g
Rs.121488.40
2 0 1 0- 11.
c r or e
has
been
s a n c t i o n e d f o r 4 4 4 1 6 2 pr o j e c t s a s o n 3 1 M a r c h 2 0 11
71

c o v e r i n g i r r i g a t i o n , r ur a l r o a d s a n d b r i d g e s , h e a l t h a n d
education, soil conservation, drinking water schemes,
f l o o d p r o t e c t i o n , f o r e s t m a n a g e me n t e t c a n d a s o f 3 1
M a r c h 2 0 11, 5 7 9 p r o j e c t s i n v a r i o u s d i s t r i c t s o f 1 4 s t a t e s
b e n e f i t e d u n d e r t h e Wat e r s h e d D e v e l o p me n t F u n d w h i c h
h a d a b a l a n c e o f R s . 1 8 4 7 . 6 9 c r or e .
D u e t o t h e B a n k ' s e ffi c i e n t f u n c t i o n i n g f a r me r s c a n n o w
enjoy hassle free access to credit and security through
1009.30 lakh Kisan Credit Cards that have been issued
t h r o u g h a v a s t r u r a l b a n k i n g n e t w o r k . D ur i n g 2 0 1 0 - 11,
72.6 lakh KCC were issued by banks with a sanctioned
l i mi t o f R s . 4 3 3 7 0 c r o r e .
U n d e r v a r i o u s f u n d s a n d pr o g r a m m e s s u c h a s t h e Tri b a l
Development Fund, cumulative sanction amounted to Rs.
9 1 7 . 6 0 c r o r e f o r 3 1 7 p r o j e c t s c o v e r i n g 2 . 5 l a k h f a mi l i e s .
D u r i n g 2 0 1 0- 11 f i n a n c i a l a s s i s t a n c e o f R s . 3 7 3 . 9 7 c r or e
was sanctioned for 126 projects benefiting 94,163 tribal
f a mi l i e s , t h e F ar m e r s ' C l u b Pr o g r a m m e , d u r i n g t h e y e a r
21903 clubs were launched, taking the total to 76708 clubs
a s o n 3 1 M a r c h 2 0 11 h e l p i n g f a r me r s g e t a c c e s s t o c r e d i t ,
t e c h n o l o g y a n d e x t e n s i o n s e r v i c e s a n d a cr o s s 2 5 s t a t e s
Th e Vil l a g e D e v e l o p me n t Pr o g r a m m e w a s i m p l e me n t e d
i n 8 0 1 v i l l a g e s . Th e o t h e r v e r y s u c c e s s f u l f u n d i n g w a s
u n d e r t h e F a r m I n n o v a t i o n a n d P r o mo t i o n Fu n d ( FI P F ) ,
w h i c h c u mu l a t i v e l y h a s 1 2 3 p r o j e c t s i n v a r i o u s s t a t e s ,
i n v o l v i n g f i n a n c i a l s u p p o r t o f R s . 11. 6 5 c r or e w h i c h w a s
s a n c t i o n e d o n 3 1 M a r c h 2 0 11.
72

Th e r e 5 1 2 i n n o v a t i v e pr o j e c t s a c r o s s 2 7 s t a t e s w i t h
g r a n t a s s i s t a n c e o f R s . 4 4 . 9 7 c r or e w h i c h w e r e s a n c t i o n e d
d u r i n g 2 0 1 0 - 11 u n d e r F a r me r s Tec h n o l o gy Tra n s f e r F u n d
( F T T F ) . Th e mi c r o f i n a n c e p r o gr a m m e s a n c t i o n e d m o r e
t h a n 6 9 . 5 3 l a k h s a v i n g s l i n k e d SH G s a n d m o r e t h a n 4 8 . 5 1
lakh
credit
linked
SHGs
covering
9.7
crore
poor
h o u s e h o l d s a s o n 3 1 M a r c h 2 0 11.
CONCLUSION
Th e p ar l i a m e n t c r e a t e d t h e N A B A R D a c t a n d t h e Ap e x
b a n k i n o r d e r t o a i d t h e r u r a l f a r me r s t h a t h a d l o n g b e e n
n e g l e c t e d b y t h e G o v e r n m e n t . Th e r e w a s s u c h a n i m i t a t i v e
to
uplift
industries
and
capital
market
that
these
a g r i c u l t u r a l s e c t o r s w e r e b e i n g gr o s s l y n e g l e c t e d . E v e n
the apex bank of the country the Reserve Bank of India
w a s s o k n e e d e e p i n o t h er r e s p o n s i b i l i t i e s a n d d u t i e s t h a t
i t c o u l d n o t g i v e a d e q u a t e a s s i s t a n c e t o t h e r u r a l f a r me r
a n d t h e i r p o p u l a t i o n w h i c h m o s t l y c o mp r i s e d o f a r t i s a n s ,
s m a l l b u s i n e s s o w n e r s a n d s ma l l o t h e r s ma l l e n t e r p r i s e s .
73

Th e r e w a s a n e e d o f a d e q u a t e f u n d i n g t o t h e s e s e c t o r s
i n o r d e r f o r t h e m t o d e v e l o p a n d f l o u r i s h l i k e t h e o t h er
s e c t o r s t h a t t h e I n d i a n G o v e r n me n t w a s g i v i n g u n d i v i d e d
a t t e n t i o n t o . Th u s t h i s l e d t o t h e f o r ma t i o n o f t h e R u r a l
A p e x b a n k n o w k n o w n a s N A B A R D . Th e a p e x r ur a l b a n k
w a s a b l e t o f o r m t h e r e l a t i o n b e t w e e n cr e d i t d e l i v e r a n c e
a n d t h e a gr i c u l t u r a l s e c t o r.
Th e r ur a l b a n k h a s b e e n s u c c e s s f u l i n c r e a t i n g m u l t i p l e
f u n d s a n d s c h e m e s i n o r d er t o a i d t h e r u r a l f a r me r. Th e
e s s e n t i a l p oi n t t o n o t e h e r e i s t h a t t h e b a n k n o t o n l y
facilitates the funding to the farmer but also makes them
s e l f - s u ffi c i e n t b y t r a i n i n g p er s o n n e l i n or d e r t o b e t t e r
understand modern techniques of farming which only
p r o p a g a t e s t h e gr o w t h a n d d e v e l o p me n t r e l a t i n g t o r u r a l
e c o n o m i e s . Wit h t h e h e l p o f t h e R B I t h e a p e x r ur a l b a n k i s
a l s o r e s p o n s i b l e f o r f o r m u l a t i n g p o l i c i e s t o f u r t h er b e n e f i t
t h e a g r i c u l t u r a l f a r m e r s a n d t h e r u r a l p o or.
Th e b a n k r e a l i z e s t h e p o t e n t i a l o f t h e a gr i c u l t u r a l
s e c t o r a n d t er m s n o n c r e d i t
w or t h y f a r m e r s a s c r e d i t
w o r t hy o n e s , t h e s e f a r me r s w e r e l o n g r e j e c t e d by o t h e r
financial institutions due to the lack of guarantee on their
c r e d i t . B u t r e c e n t s t a t i s t i c s w i l l s h o w t h a t t h e f a r me r s
have lived up to the confidence instilled in them and are
a c t u a l l y c r e a t i n g pr o f i t a n d a r e n o w o p e r a t i n g h a s s l e f r e e
when it comes to financing their activities.
Var i o u s s c h e m e s a n d f u n d s a l l o w f a r m e r s t o i n n o v a t e
and create new methods and inventions that help them in
74

their field and this is solely because of the investments
done by the rural bank.
T h e b a n k n o t o n l y h e l p s i n cr e d i t d e l i v e r y t o t h e f a r me r s
but
also
to
the
state
government
and
NGOs
and
cooperative banks as well, this proves that when given the

o p p o r t u n i t y t h e r u r a l b a n k c a n di v e r s i fy i n o t h e r s e c t o r s .
R e c e n t d e v e l o p me n t s h o w s t h a t N A B A R D i s a l l f o r
modern and hi tech technology to enhance the productivity
o f t h e f a r m e r s u c h a s g e n e t i c m o d i f i c a t i o n t e c h n i q u e s . Th e
statistic will only show that the Rural Bank is doing much
b e t t e r a n d i s f a r m o r e e ffi c i e n t t o i t s c l i e n t e l e t h a n m o s t
c o r p o r a t e a n d o t h e r Fi n a n c i a l I n s t i t u t i o n s h e n c e p r o v i n g
n o t e v e r y t h i n g " r ur a l " i s b a c k w a r d s
BIBLIOGRAPHY:
Websites:
www.nabard.org.
www.indiafinace.org.
www.indiatimes.com.
Www. economictimes.indiatimes.com.
www.indiamicrofinance.com
75
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Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

financing, regulating and monitoring various financial

Role of NABARD in Indian agricultural sector

subsidiaries & structure

Role of NABARD in Indian agricultural sector

To know the problem faced by the Indian agricultural

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

1.1 INTRODUCTION- NATIONAL BANK FOR

policies, planning and operation in

absorptive capacity of the credit institutions, training of

activities of all institutions engaged in development work

Role of NABARD in Indian agricultural sector

established in July 1982 on basis of the recommendations

forceful direction and a pointed focus to the credit

Role of NABARD in Indian agricultural sector

cooperatives, regional rural banks, etc. Moreover it makes

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

agencies working in the field of agriculture and rural

Role of NABARD in Indian agricultural sector

1.8 OBJECTIVES OF NABARD

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Debentures. NABARD borrows from commercial banks,

carrying out business with the intent of accelerating the

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

2.4 ORGANIZATIONAL STRUCTURE OF

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

reserves for the same. India depends heavily on the

Role of NABARD in Indian agricultural sector

season as heavy rainfall during the time leads to a rich

Role of NABARD in Indian agricultural sector

3.2 PRESENT SCENARIO OF AGRICULTURAL

Role of NABARD in Indian agricultural sector

3.3 FEATURES OF INDIAN AGRICULTURE

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

decades; agriculture occupies a place of pride. Being the

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

manufacturers and therefore better prices. In other

income will not rise to an extent, which is necessary

Role of NABARD in Indian agricultural sector

4.2 India's Agriculture Developm ent Problem :

sector does not occur as a shocking matter as these poor

Role of NABARD in Indian agricultural sector

the livelihood of the farmers to go downhill.

better irrigation systems.

better banking systems

Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

5.1 FUNCTIONS OF NABARD