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1/14

Credit related issues in Rainfed

Areas

Dr. K.J.S.SatyasaiAgrl Economist, NABARD, Mumbai

Venue: CRIDA, Hyderabad

Event: National Workshop on Opportunities for

enhancing land and water productivity in rainfed

agriculture

Date: 10 March 2012


2/14

forrains, support, policy and dignity and

eternally so

The life of a common farmer in

rainfed areas is one of

Waiting


3/14

How Rainfed

Areas areDifferent?..1

Poor natural resource base

Delicate/adverse water

balance

Inequality in access to

resources and incomeinequalities

Deterioration in traditional

institutions

Inadequate capital

formation

focus here onlow and erratic

rainfall areas

Disadvantaged

Compounded

problems


4/14

How Rainfed

Areas areDifferent?..2

Poor livelihood options

Continued dependence on

farming for livelihoods

Policy bias against and /or

inappropriate policy

Problem of policy percolation

one cap fits all does not

work

Conflict between objectiveseg.land vs water productivity

Constraints poor access to:

Land

Credit

critical inputs

extension & researchmarkets

risk mitigation mechanisms

(12th Plan WG on D&W Farmers)


5/14

Credit

Issues..1

Multifarious needs ST and

LT

Formal agencies performed

short of expectations- Risksin lending

Inequalities in access to

formal credit

Poor driven to Pvt ML arehigh cost sources

Supply issues:

Exclusion

Inequalities

Regional

inequalities


6/14

Credit

Issues..2

Unirri area &

%insttl

borrowers

inverse

relation

y = -0.346x + 42.753

R2

= 0.2212

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00

% unirrigated area

%institutionalborrowingOHH


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Credit

Issues..3

Low credit

flow

Inadequacyfrom formal

agencies

Estimated credit/ha to

irrig area = Rs. 12318

Unirri area = Rs. 2302

Security orientation -

underfinancing

Individual orientation

vs. community focus Cyclical Credit


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Credit

Issues..4

Planning & approach notsuited to local needs &

realities Credit flow to MI, SWM, LD,

FM for land productivity

But not for improving waterproductivity no data

Credit for GW over-

exploitation?

Efforts for balance

across regions,sectors and

sections (incentives)

Sporadic lending vs.area approach

No credible plan forsustainability


9/14

Credit

Issues..5

Demand side

issues resource

allocation & risk

return; foodsecurity

concerns

Low returns to

investment

Risks and lack of

insurance

Collateral problems

Diversification options

low Misallocation of

resources (eg. Water)


10/14

Credit

Issues..6

Ensure Equity

Inclusion

mechanismsSHGs, JLGs, POs,

KCC

Infrastructure

distribution lopsided Small and scattered,

fragmented holdings

Tenants and the

excluded

Many needs cannot be

met by formal agencies


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What to

do?

Credit system

revival

Finding ones real

worth- nomimicking

Revamping credit system:

Integrated aproach to credit

delivery;PSL redefinition

Coop revival

New enterprise optionswithlocal sourcing (eg.Cactus toffee)

New markets cash on neo-

rich (eg.millets)

Revive village tank systems

Revive local wisdom&

tradition


12/14

What to

do?

natural

resource

rejuvenation

&

conservation

GOI/RBI/NABARD schemes

NWDPRA IWMP

MGNREGA

WADI

NRAA

Support systems


13/14

What to

do?

Mantra is

Convergence

Augmentwater

resources

Technology

interventionssoil &

water

River linking long

term hope

Infrastructure

Community focus

Sustainability focus


14/14

Thanks for yourattention

I thank Dr.Suri Babu, NABARD and

www.rainfedfarming.org for issues

& inputs

Thanks to

Director, CRIDA &

his Team for giving this

opportunity
http://www.rainfedfarming.org/http://www.rainfedfarming.org/

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