Agribusiness, Food Security and Financial Inclusion in India
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Transcript of Agribusiness, Food Security and Financial Inclusion in India
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Agriculture Business, Food Security and Financial Inclusion? 2014
1 Manoj Rawat | Head Agribusiness RBL Bank, Mumbai | [email protected]
Manoj Rawat, Head- Agribusiness RBL Bank, Mumbai [email protected]
Agriculture Business, Food Security and Financial Inclusion
Its often quoted share of agriculture in GDP is < 14% and is continuously shrinking. While the share
of pure agriculture in national Gross Domestic Product (GDP) may have declined, the share of
agribusiness in is bound to go up significantly with the demand for value addition continuously
increasing in India.
With 60% of Indian families still depending on agriculture income for livelihood, India today is
largest producer of milk, pulses, and spices, maintains the largest cattle herd, have the largest area
under wheat, rice and cotton. Although the agriculture growth rate and per unit productivity
remains a big challenge and big area of concern, the country is steadily emerging as agricultural
power. Agribusiness can empower India emerge as "Global Agricultural Super Power".
Agriculture development to a large extent addresses the two key areas which are drawing the
maximum attention from Government, regulators, financial institutions and many others i.e., Food
security and Financial Inclusion. These twin areas are intertwined with the next phase of
economic growth of the India which we all aspire for, that which will be which lot more
participative, broad based & inclusive and can be become real engine which will propel country
into next growth trajectory.
While Food security of the country can be only ensured by pushing the Agriculture growth, the
Financial Inclusion in India can truly be delivered through a framework which has Farmers at
its heart.
Agribusiness is the next big opportunity
With mounting pressure of a growing population, the change in food consumption patterns, the
need for higher productivity per unit of input, demand of value added products, ensuring the
educated youth could be retained in agriculture and above all the need to ensure food security of
the country, Agribusiness is now being seen as next big opportunity and the growth engine of
future by the entrepreneurs, corporate houses, banks and financial institutions.
The 10 key pointers why agriculture remains at center growth and inclusive growth.
1. Agriculture still remains the mainstay of Indian economy
Agriculture sector remains the mainstay of the Indian economy, contributing about 14% per cent of
the national Gross Domestic Product (GDP). While agricultures share in Indias economy has
continued to decline due to the high growth rates of the industrial and services sectors, the
agriculture sectors importance in Indias economic and social well being goes well beyond this
indicator.
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Agriculture Business, Food Security and Financial Inclusion? 2014
2 Manoj Rawat | Head Agribusiness RBL Bank, Mumbai | [email protected]
2. Capital formation in agriculture and Productivity
With 60% of Indian families are still depending on agriculture income for livelihood, India today is
the largest producer of milk, pulses, and spices, maintains the largest cattle herd, have the largest
area under wheat, rice, cotton and much more. While the country is steadily emerging as a global
agricultural hub, we still need to address serious issues and concerns on slow agriculture growth
rate, lack of capital formation in agriculture, fragmented agriculture landholding, inadequate
irrigation facilities, over exploitation of ground water and poor productivity per unit land. This
would lot of long term investment in agribusiness (especially private sector), innovations in
agriculture sciences, better agri- inputs, better technology, focus on natural resources conservation
and create a robust framework for modernization of agriculture.
3. Shift from Agriculture to Agribusiness
Indias food security will depend on increased crop productivity, higher milk yield, increase its
production of grains, fruits and vegetables, reduction in food wastage, managing land and water
resources optimally and developing a robust agri-marketing and logistics infrastructure and
enabling policies for capital investment in this sector. This is critical to meet the demand of a
growing population, to provide optimal nutrition to a large segment of society and to become a
global food hub. To do so, a highly productive, competitive and sustainable agricultural sector will
need to emerge at an accelerated pace and there needs to be a shift from agriculture to
agribusiness to revitalize the agriculture segment and achieve the 4 to 8 % growth rate on Y-O-Y
basis.
4. Agriculture credit is the most critical non-land input for development of Agribusiness
Over the years Agricultural credit has played a pivotal role in increasing agricultural production in
India. The flow of credit to agriculture has increased significantly in the recent at an annual
compounded growth rate of about 25%. The annual agriculture credit flow expected for this year is
INR. 700,000 crore ( USD 120 Billion) which may increase to INR 950,000 crore ( USD 160 Billion)
for the following year. A granular analysis would point to the fact that the flow of credit still needs
to be augmented. The amount that will flow through institutional framework should encourage
entrepreneurs, corporate houses and institutional investors in bring in investment for development
this sector.
5. Access of credit to Small & Marginal farmers
Although the amount of agricultural credit has increased during the last few years, the access to
formal sources of credit has been inadequate for small and marginal farmers, tenant farmers, oral
lessees, share-coppers, who constitute the bulk of farming community. Around 80+ percent of
farmers have land holdings less than 2 ha who are spread across 600,000 villages in India. We need
to increase our outreach to these farmers and it is possible with new innovations in product design
and methods of delivery, better use of technology, optimization of processes and better
understanding of agriculture landscape.
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Agriculture Business, Food Security and Financial Inclusion? 2014
3 Manoj Rawat | Head Agribusiness RBL Bank, Mumbai | [email protected]
6. Financial Inclusion Small and Marginal farmers will be at the heart of inclusion policy
More than 2/3rd of Indias population is dependent on Agriculture and allied agriculture activities.
Bulk of our farming community belongs to Small and marginal category who own 83 % operational
holdings with 63% of farmers being marginal and having landholding
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Agriculture Business, Food Security and Financial Inclusion? 2014
4 Manoj Rawat | Head Agribusiness RBL Bank, Mumbai | [email protected]
10. Agribusiness is bound to become the most critical business segment
Given the unlimited! opportunities and vast un-tapped potential, Agribusiness is bound to become
one of the critical business segment for the banks, financial institutions and corporate houses in
days to come and a key to achieve growth which is inclusive and generates economic value to all the
stakeholders. It needs to be appreciated that significant part of Financial Inclusion in India can be
achieved only through Agri-finance Inclusion.
It would be important to note that while we do have National policies on Agriculture, National
Policy on Farmers, Policy on Credit and Inclusion etc, however it is implementation where a lot
more concerted and coordinated efforts are required from various stakeholders to rejuvenate the
farm sector and bringing lasting improvement in the economic condition of the farmers. Effective
implementation of policy initiatives will call for comprehensive reforms and strong public, private
and people partnerships in the management of agriculture in India.
I would sum up by a quote made by Dr. Swaminathan, Eminent Agriculture Scientist The future
belongs to nations with grains and not guns.
Manoj Rawat
The views expressed in this article are purely personal.
Email: [email protected]
LinkedIn : http://in.linkedin.com/in/mkrawat