Date:22/02/2006 URL: http://www.thehindubusinessline.com/2006/02/22/stories/2006022202631900.htm

Back `Banks must start planning medium-term agri strategy'

Our Bureau

Banks need to use the vibrant rural non-farm sector, which is partly insulated from agriculture for directing credit.

Chennai , Feb 21

WITH the outlook buoyant for agriculture in the coming year, this is the time to push for medium and long-term strategies for rural development, according to the Tamil Nadu Chief Secretary, Mr N. Narayanan.

Addressing a State-level credit seminar organised by Nabard today, he said that banks should go beyond annual targets of credit disbursement and numbers.

With water availability "spectacular" following the monsoons, summer irrigation and cropping activity is bound to be good and there need be no concern on credit flow.

Multiple droughts prior to the monsoon led to credit blockage and the Government has given farmers a substantial relief package that prevents debt burden. "Over Rs 250 crore is flowing directly into the farmers' accounts."

Banks should now be looking at medium-term strategies for growth in agriculture. New items of investment must be identified, and agriculture has to be made "income incremental," he said.

Banks need to use the vibrant rural non-farm sector, which is partly insulated from agriculture for directing credit.

SHGs can play a major role in this area and their entrepreneurship can be a route for credit disbursement.

In agriculture, enhancing productivity is an enduring challenge. This has to come from improved water use efficiency.

The Tamil Nadu Government is looking at micro watersheds and planning on enabling them to absorb investments.

It is taking up 1,000 such watersheds with the participation of agriculture engineering and wasteland development agencies, and the Forest Department.

Banks need to push investment credit into agriculture and consider if more than just a crop loan is needed in such watersheds.

He appealed to the banks to work with the Animal Husbandry Department and District Industries Centres and "look more sharply at the rural non-farm sector in diversification, and in mainline agriculture at additional areas like technology and crop diversification."

The new areas could be value addition in herbal medicine and services.

Exposure to market information and conversion of information to value is low.

According to the credit plan for 2006-07, Nabard has identified a credit potential of Rs 26,058 crore in the priority sector in Tamil Nadu.

This includes Rs 9,780 crore for crop loan, Rs 7,068 crore for non-farm sector, and Rs 5,718 crore for other areas.