Recent Developments

1.       Massive statistical data clearly establish that there is a concentration of poverty & distress in the dry lands, hilly, tribal, drought prone & desert areas. This phenomenon of regional imbalance in India’s development finds official recognition in the Planning Commission’s recent Report of the Inter-Ministry Task Group on Redressing Growing Regional Imbalances that has developed a list of 170 most backward districts including 66 extremist affected districts. Prime Minister hinted at the resolution of this problem in his Independence Day speech last year when he desired Government’s intention to set up a National Authority for Sustainable Development of Rainfed Areas [NASDORA]. The Parthasarathy Committee Report on NASDORA has now been accepted by the Government & is being studied for its implementation.  

2.       For the first time since the mid-1960s, foodgrain production grew slower than population in the 1990s. The output of crops grown & consumed by the poorest of the poor & cultivated largely in drylands actually declined during the decade & the rate of growth of their yields decelerated considerably.    

3.       In a candid acknowledgement of the enormity of problem of farm sector development Prime Minister Dr. Manmohan Singh, in his recent inaugural address at the 93^rd session of the Indian Science Congress, dwelt upon the need for second Green Revolution with a special focus on dry land agriculture and small & marginal farmers. He called upon scientists to devise appropriate & affordable, labour-using technologies for energy & water, especially designed for farmers of drought-prone regions.

4.       Dr. M.S.Swaminathan who chaired “National Commission on Farmers” has drawn the  attention of all concerned with the farm sector development & amelioration of rural poverty on five point program such as,[i]soil health enhancement, [ii]water harvesting, water conservation and sustainable & equitable use of water [iii], access to affordable credit and crop and life insurance that needs urgent focus after the unending spate of suicides; [iv]development & dissemination of appropriate technologies; and [v]improved opportunities, infrastructure & marketing regulations. The Prime Minister, while endorsing this five point program, has thoughtfully added application of science to animal husbandry as this is of greatest relevance to landless, Dalits and pastoral communities.

5.       The All India Debt & Investment Survey has revealed that the share of money lenders in total dues of rural households has substantially increased from 17.5 per cent in 1991 to 29.6 per cent in 2002. The findings of the National Sample Survey 59th Round (2003) revealed that out of the total number of cultivator households only 27 per cent receive credit from formal sources and 22 per cent from informal sources. The remaining households, mainly small and marginal farmers, have virtually no access to credit. With a view to bringing more cultivator households within the banking fold, Finance Minister suggested that a Committee on Financial Inclusion would be appointed to identify the reasons for exclusion, and suggest a plan for designing and delivering credit to every household that seeks credit from lending institutions.

6.       The findings of the World Bank & NCAER under the ‘ Rural Financial Access Survey” conducted in States of Andhra Pradesh & Uttar Pradesh in 2003 also supports these findings & reveal that [i] only 21 per cent rural households had access to formal credit [ii] small & marginal farmers were at relatively disadvantaged position as only 11.8 per cent of marginal farmers in Andhra Pradeh & 13.5 per cent  in Uttar Pradesh secured loans from banks and [iii] the time taken for loan clearance ranged from 24 to 33 weeks & loans were generally collateralized.

12.   With regard to increasing the outreach & deepening of credit under Micro- Finance, as proposed  in the last Budget,  RBI has since issued guidelines to enable banks to appoint banking correspondents and banking agents. A window to access ECB funds has also been opened. A Bill to provide a formal statutory framework for the promotion, development and regulation of the micro finance sector will be introduced in this session. Banks would credit-link as many as 385,000 SHGs in the year 2006-07. NABARD would  open a separate line of credit for financing farm production and investment activities through SHGs.

13.   The RBI has accepted the recommendations of [a]the Task Force chaired by Prof. A.Vaidyanathan on Revival of Rural Co-operative Banking Institutions & Long-term Co-operative Credit Structure [b] the Internal Group chaired by Shree H.R.Khan to examine issues relating to rural credit & micro-finance and [c] action taken report of the Advisory Committee on flow of credit to agriculture & related activities from Banking system chaired by Prof. V.S.Vyas  Banks have been advised to implement the same so as to facilitate smooth flow of credit to farm sector & clients of micro-credit .