NATIONAL SEMINAR ON AGRICULTURAL CREDIT - 3-4 JULY 2007
Executive Summary and Action Points
National Bank for Agriculture and Rural Development organized a ‘National Seminar on Agricultural Credit’ on the occasion of its Silver Jubilee Celebrations on 3 and 4 July 2007 at Center for Social Economic Studies, Ameerpet, Hyderabad . The National Seminar was inaugurated by Dr. Y S Rajasekhara Reddy, Hon’ble Chief Minister of Andhra Pradesh on 3 July 2007 . The plenary sessions held on 3 and 4 July 2007 focussed on (1) Indian Agriculture - Production, Productivity and Technology related issues (2) Marketing and Extension related issues (3) Risk Management and (4) Rural Livelihoods and Employment Generation - Micro Finance and Non Farm Sector. The plenary sessions were chaired by eminent personalities such as Prof. C H Hanumantha Rao, Chairman, CESS, Shri Abhijit Sen, Member, Planning Commission, Prof. S Mahendra Dev, Director, CESS and Ms. Shashi Rekha Rajgopalan, member, Board of Directors of RBI and NABARD.
In the back drop of the massive credit requirements projected for development of agriculture sector in the Eleventh Five Year Plan by Government of India, the seminar also focused on the challenges facing NABARD in meeting the national goals. The themes planned under this area were - (1) Foundations and Resources of NABARD (2) NABARD in next 25 years and (3)NABARD - Future Challenges and Road Map. The plenary sessions were chaired by Shri M. Ramakrishnayya, founder Chairman of NABARD, Shri P Kotaiah and Shri Y C Nanda former Chairmen of NABARD. Dr. Y S P Thorat, Chairman, NABARD and Dr. K G Karmakar, Managing Director guided the deliberations of the seminar. Some of the major observations made during the seminar by the eminent panelists are given below:
Core foundations of NABARD
NABARD was intended to function on ‘business principles’ and not ‘commercial principles’. “Profit Maximization' is not the goal of NABARD but it has to function on ‘business principles’ making reasonable profit for making the institution stable and continuing.
NABARD should be a Development Facilitating and Financing Institution
(D F f I)in Rural Sector
Resources of NABARD
There is a national need to create a National Rural Credit (Short Term Operations) fund with Rs.15000 crore corpus to bring down the cost of credit to the farmers. Secondly, the share capital of NABARD needs to be increased to Rs.10,000 crore to make interventions meaningful. NABARD may be taken as a partner in all the rural development projects by the Central Government. NABARD may be placed on the board of commercial banks to add value to both banks and NABARD.
NABARD is the only institution which is mobilizing urban surpluses and investing in rural areas. As such, the resource mobilization efforts of NABARD should be supported with fiscal concessions.
Role of NABARD
General aspects
NABARD should be a managing agency of Government of India for public investments in rural India . It should be the chief overseer, grand planner for public investment and ensure that each rupee spent in rural India generates a net positive return for rural India.
NABARD should not resort to passive funding. NABARD has to make things happen by organizing people and providing knowledge.
The strength of NABARD is its good networking capabilities. It can act as a coordinating agency for all the developmental works taking place at the grass roots level.
The greatest comparative advantage of NABARD is its ability to decontaminate the effects of subsidy and making public spending more efficient.
It is a folly for NABARD to become a Commercial Bank. It is the only institution which can handle public finance better than the government.
Future role of NABARD
NABARD may document its achievements, failures, aspirations, what contributed to failure and success in the past 25 years. With these ideas on table, five or six ideas may be identified and a clear path may be chalked out and a blue print for the next 25 years may be drawn.
Credit planning
NABARD should actively engage in developing a long term credit policy for rural finance clearly laying role of various agencies in our multi agency approach to bring a role clarity for all the agencies.
With the stress on decentralised planning at PRI level, there is a need to strengthen the institution of DDMs and PLP instrument by NABARD.
Credit functions
Refinance has lost its teeth and moreover no organization can borrow at higher rates and lend at lower rates. NABARD should become an important player in retail markets.
Support to agriculture technology
NABARD has to provide more grant-in-aid for research projects in agriculture technology. NABARD has to cover the last mile by funding the gaps where private sector is not coming forward.
Producer companies
NABARD can promote the producer companies.
Educating of farmers
It has to educate farmers on economic climate.
NABARD may conduct short duration training programmes for farmers on the basic skills and application of new technology.
New business opportunities
NABARD should take up ‘management role’ in Regional Rural Banks by taking 50% share holding to reach village people effectively. It can enhance the value of RRBs by bringing in transparency, supply chain credit and insurance.
DRI interest rates for agriculture
Hon’ble Chief Minister of Andhra Pradesh urged that Differential Rate of interest may be extended to the entire rural credit and priority sector lending. In case RBI, NABARD and banks have difficulty in reducing the interest rates to 4%, GoI should come forward to give support to this move.
Formation of subsidiaries
NABARD may create more organizations to fill the critical gaps by forming subsidiaries and see to it that they are supported and nurtured in a manner that they become effective.
A subsidiary for funding rural infrastructure may be formed as it has developed expertise in funding of private and public sector infrastructure development. The subsidiary should be given the responsibility of mobilizing funds, if required, from overseas.
Human resources
NABARD should have a strong technical wing with competent people in various disciplines such as commercial agriculture, agro processing, marketing, risk mitigation. The Technical officers should be exposed to the field for constant upgradation of their technical skills. This team may act as ‘brain trust’ for the nation for deciding what is to be done and what is not to be done.
NABARD should be a learning organization. It has strong human resources. Its junior officers should develop 'specialization' and seniors ‘strong perspective'.
SHG-Bank Linkage programme
NABARD needs to focus on the quality of Self Help Groups behind the large numbers. NABARD should evolve a national strategy for sustainable SHG movement in India through a consultative process.
Unless NABARD engages actively in creation of larger structures such as federations, a great opportunity will be missed. NABARD should Commission a country-wide study on SHG Federations to understand their present role and future potentials.
NABARD should facilitate common standards, book keeping system and self regulatory mechanism for the SHG members.
Non Farm sector
The non grain crop sector and animal husbandry are clocking faster growth pointing towards the diversification that is taking place in agriculture sector. Eleventh plan preliminary numbers indicate that 2.8% of 4% agriculture growth is going to come from diversification. It is a big business for NABARD and NABARD should see that happen.
To build robust NFS so that benefits flow to a large number of rural population, we need to build new institutions such as Producer Organizations or to begin with Farmer Organizations in agro processing sector.
NABARD must take up a study of couple of villages where regular credit flow has taken place in the past five years to a large number of families and document the effect of the credit on the non farm sector.
Coping mechanism for Indian farmers
Dr. K G Karmakar, Managing Director suggested the panel on Risk management (Shri Mahendra Dev, Chairman and Shri Vijay Mahajan, Shri M Prashad, MD, AICI and Shri Ravi Kumar, MD, NCDEX, Mumbai as members) that they may collectively bring out a Paper on "Coping Mechanism for Indian Farmers". NABARD would extend necessary help in this regard.
Image of NABARD
NABARD should work in improving its visibility and image in rural areas. NABARD can consider sponsoring programmes such as weather bulletin, farmer education programmes on Television and All India Radio to publicize the name of NABARD in remote rural areas.
National Bank for Agriculture and Rural Development organized a ‘National Seminar on Agricultural Credit’ on the occasion of its Silver Jubilee Celebrations on 3 and 4 July 2007 at Center for Social Economic Studies, Ameerpet, Hyderabad . The National Seminar was inaugurated by Dr. Y S Rajasekhara Reddy, Hon’ble Chief Minister of Andhra Pradesh on 3 July 2007 . The plenary sessions held on 3 and 4 July 2007 focussed on (1) Indian Agriculture - Production, Productivity and Technology related issues (2) Marketing and Extension related issues (3) Risk Management and (4) Rural Livelihoods and Employment Generation - Micro Finance and Non Farm Sector. The plenary sessions were chaired by eminent personalities such as Prof. C H Hanumantha Rao, Chairman, CESS, Shri Abhijit Sen, Member, Planning Commission, Prof. S Mahendra Dev, Director, CESS and Ms. Shashi Rekha Rajgopalan, member, Board of Directors of RBI and NABARD. 
