RABI CAMPAIGN 2004-05

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• RABI CAMPAIGN 2004-05
• PRESENTATION ON
• AGRICULTURAL CREDIT,
• CROP INSURANCE SCHEMES
• AND COOPERATION
• DEPARTMENT OF AGRICULTURE COOPERATION
• 18TH SEPTERMBER, 2004

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AN OVERVIEW OF AGRICULTURE CREDIT

• IX Plan target Rs.2,29,750 crore.
• Achievement Rs.2,31,798 crore(CAGR 19.4 ).
• Estimated credit requirement for X Plan Rs.
  7,36,570 crore.
• X Plan first two years achievement far short of
  targets.
• 2002-03 Target Rs. 82,073 crore
  Achievement Rs. 70,810 crore.
• 2003-04 Target Rs. 1,05,958 crore
  Achievement Rs. 8 80,000 crore.

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Regionwise position of Agriculture Allied Loans
(ST LT) disbursement Shares in Total (per
cent)
Region 1995-1996 2001-2002
Northern 11.6 19.9
North Eastern 0.4 0.5
Eastern 6.4 7.4
Central 16.4 14.1
Western 17.1 14.4
Southern 48.0 43.8
100 100
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• Share of Western Southern Regions continues to
  be significant at 58
• Share of Northern Region has increased
  significantly from 11.6 to 19.9 mainly because
  of Punjab, Haryana Rajasthan
• - Punjab 5.7 to 10.4
• - Haryana 2.2 to 4.4
• - Rajasthan 2.5 to 3.6
• The Central Western regions traditionally
  associated with good potential in agriculture
  have not attracted credit flow.
• Even state-wise, Maharastra has been static at
  7, Gujarat has fallen from 9.8 to 7.0, MP has
  declined from 9 to 3.9 in 2001-2002.

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National Common Minimum Programme

• Flow of rural credit to be doubled in the next
  three years.
• Rural credit delivery system will be reviewed and
  immediate steps will be taken to ease the burden
  of debt and high interest rates on farm loans.
• Rural cooperative credit system will be nursed
  back to health.

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Action taken to implement NCMP

• Special credit package announced by Government of
  India on 18th June, 2004 for doubling credit flow
  in next three years and providing credit related
  relief to farmers.
• Agriculture credit flow to increase from Rs.
  80,000 crore in 2003-04 to Rs.1,04,500 crore in
  2004-05 (Commercial Banks Rs.57,000 crore
  RRBs Rs.8,500 crores Coop. Banks Rs.39,000
  crores).
• Enhancing coverage of credit through KCCs by
  expanding its scope to include component of
  consumption credit and term loans for investment
  in agriculture allied activities.
• Reviewing the system of fixation of scale of
  finance to meet the realistic credit needs of
  farmers.

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contd.

• Each rural semi- urban branches of commercial
  banks to bring into their fold at least 100 new
  farmers during current year.
• Each rural semi-urban branches of Commercial
  Banks to take up at least 2 or 3 new investment
  projects in the area of plantation,
  horticulture,fisheries, organic farming, agro-
  processing, live-stock, micro- irrigation,
  sprinkler irrigation etc.
• In every district, on an average, 10 agro clinics
  to be financed by the banks during current year.
• Formation and financing of SHGs of tenant farmers
  and oral lessees.

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Contd

• Debt restructuring of farmers under following
  heads
• Rescheduling /restructuring of loans of farmers
  in distress.
• Relief to farmers in arrears.
• One-Time Settlement (OTS) Scheme.
• Redemption of Debts of Farmers from
  non-Institutional Sources.
• Guidelines issued by RBI/ NABARD for
  implementation of these measures.

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Expectations from State / UTs

• To gear up their system for successful
  implementation of the announced package.
• Should work out an appropriate review and
  monitoring mechanism.
• SLBC should be energized and made an effective
  forum for improving agriculture credit flow.
• Government should take interest and be
  represented at appropriate levels in the SLBC
  meetings.
• Keep watch on rate of interest and procedural
  complexities.

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CROP INSURANCE SCHEMES
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Risk Management and Crop Insurance

• Uncertainty in agricultural production depend
  to a large extent on weather conditions.
• Agriculture production dependant upon good
  monsoon 60 area is still unirrigated.
• Some areas are prone to floods and some to
  drought which affect crop yields.
• Crop Insurance is an efficient risk management
  tool.
• At present, Government sponsored National
  Agricultural Insurance Scheme (NAIS) and Pilot
  Project on Farm Income Insurance Scheme (FIIS)
  are under implementation.
• Varsha Bima Yojana (Rainfall Insurance) is
  implemented by some insurance companies including
  AIC, on Pilot basis.

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POINTS RELATING TO CROP INSURANCE INCLUDED IN
PRESIDENTS ADDRESS, BUDGET ANNOUNCEMENT AND
COMMON MINIMUM PROGRAMME (CMP)

• Farm Income Insurance Scheme (FIIS) will be made
  more responsive to the needs of farmers
  (Presidents Address, June 7, 2004).
• The National Agricultural Insurance Scheme (NAIS)
  which insures the yield is being redesigned (Key
  features of Budget 2004-05).
• Crop and livestock insurance schemes will be made
  more effective (CMP)

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NATIONAL AGRICULTURAL INSURANCE SCHEME (NAIS)

• NAIS with increased scope of coverage, was
  introduced from Rabi 1999-2000.
• The scheme is implemented by 23 States and 2
  Union Territories.
• During first nine crop seasons, 462 lakh farmers
  have been covered over an area of 743 lakh
  hectares.
• Claims to the tune of Rs. 4480.19 crores have
  been paid/are payable as against the premium
  income of Rs. 1242.65 crores.
• Crops covered are food crops (Cereals, Millets
  Pulses), Oil seeds and Annual Commercial/
  horticultural crops - Cotton, Potato, Sugarcane,
  Onion, Chilly, Ginger, Turmeric, Jute, Annual
  Banana, Pine-apple and Topioca.

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SHORTCOMINGS IN NAIS

• Over a period of time, some shortcomings have
  been observed.
• Unit area of insurance is on higher side.
• Inadequate infra-structure in the field.
• Compulsory coverage of loanee farmers.
• Insignificant participation by Non-loanee
  farmers.
• Delay in payment of claims on account of late
  submission of yield data.
• Premium not on actuarial basis.
• Low indemnity level (60).
• Assessment of yield to be protected is
  unrealistic and is on lower side.

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Farm Income Insurance Scheme (FIIS)

• FIIS has been evolved to protect Farm Income of
  the farmer from production risk and price
  variation risk.
• A minimum guaranteed income is ensured under the
  scheme.
• FIIS was implemented on Pilot basis in Rabi
  2003-04 in 19 districts of 12 States.
• In Rabi 2003-04, 1.80 lakh farmers covered over
  an area of 1.92 lakh hectare. Premium to the
  tune of Rs. 14.06 crore collected for the Sum
  Insured of Rs. 239 crore.
• The Pilot Project on FIIS has been implemented on
  existing pattern in Kharif 2004 season in 24
  districts of 6 States.
• The implementation of the Pilot Project on FIIS,
  is being evaluated through an external agency.

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Weather Insurance

• Insurance for losses due to vagaries of weather
  - excess of rainfall, shortfall in rainfall, lack
  of sunshine, temperature and humidity variation
  etc.
• Weather index based on weather parameters and by
  taking into account the past weather data is
  worked out.
• If actual index is less than threshold claims
  become payable as a fixed amount per percentage
  point of deviation of actual index from
  pre-specified threshold.
• Rainfall excess or deficiency (drought) perceived
  as a single biggest cause (90 loss) for yield
  losses.

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Contd.

• If actual rainfall index as compared to normal
  rainfall index falls short, the claims become
  payable.
• Weights are assigned keeping in view the
  importance of rainfall vis-à-vis crop growth at
  different stages.
• As per available information Rainfall Insurance
  has been introduced by General Insurance
  Companies like ICICI-Lomabard, IFFCO-Tokio, AIC
  etc.
• Rainfall insurance has certain advantages in the
  sense that it is transparent, simple and allows
  speedy settlement of claims.

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Following modifications are under consideration
of the Government

• Reduction in Unit Area.
• Stepping-up of the indemnity level.
• Revision of the formula for assessing the
  Threshold Yield to make it more realistic.
• To increase the scope of NAIS to cover prevented
  sowing due to adverse monsoon.
• To extend the scope of NAIS to cover post harvest
  losses due to cyclone, heavy rains, and
  unseasonal rains resulting in damage of the
  harvested crop.

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Contd

• To make on-account payment of about 50 claims
  on the basis of rainfall data.
• To extend Personal Accidental Insurance Cover
  under NAIS.
• To extend Package of Insurance cover such as
  cattle Insurance, tractor insurance, house
  insurance etc.

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Action initiated for Redesigning of Crop
Insurance Scheme

• Review meeting on the implementation of Pilot
  Project on Farm Income Insurance Scheme (FIIS)
  was convened on 26 27 March, 2004.
• A meeting with State Government of Maharashtra
  and representatives of the farming community was
  held on 7th June and 20th July, 2004 respectively
  to improve NAIS.
• To make use of the available expertise and to
  involve the private sector insurance companies a
  presentation meeting was convened with major
  Private Insurance Companies on 04.09.2004.
• A Joint Group has been constituted to study the
  improvements required to be made.

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• CO-OPERATION

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Amendment to the Constitution

• Constraints
• The Co-operative Sector, in spite of its
  voluminous growth and its significant
  contribution to various sectors of national
  economy is beset with several constraints, such
  as
• Elections are not held regularly.
• Supersession of Board of Directors and
  appointment of Administrators for undue longer
  period.
• General Body meetings are not held regularly.
• Audit is not professional. It is also not
  conducted in time.
• There is undue and unnecessary political
  interference and bureaucratic control even in
  their day-to-day affairs.
• Unprofessional management leading to high
  operational cost and delayed delivery of services
  to members.
• Lack of member participation.
• Poor system of monitoring and inadequate checks
  and balances.

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• Due to these constraints
• Heavy erosion in their democratic and autonomous
  functioning.
• Most of the grassroots co-operatives are not
  self-reliant and heavily dependent on Government
  Assistance.
• Management not responsive to the needs of the
  members and not truly accountable to them.
• Sickness is increasing resulting in large number
  of defunct / dormant societies.
• Co-operatives are not well equipped to face the
  challenges of open and competitive market
  oriented economy. As a result, they are not only
  loosing ground in their traditional areas of
  activities but also unable to enter into new
  ventures.

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• Initiatives taken by the Central Government
• Planning Commission appointed Braham Perkash
  Committee to recommend a model legislation for
  guidence of the State Governments.
• Braham Perkash Committee recommended a Model
  Co-operatives Act, which was circulated to all
  States.
• The Model Co-operatives Act was discussed in
  Conference of State Co-operative Ministers held
  in July 1992.
• The Conference agreed in principle with the
  recommendations of the Committee.
• Conference was of the view that Central
  Government might take a lead by amending
  Multi-State Co-operative Societies Act, 1984.
• The Multi-State Co-operative Societies Act, 1984
  has since been replaced by Multi-State
  Co-operative Societies Act, 2002.

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• The basic role of Government is to provide a
  legislative and policy framework conducive for
  development of co-operatives.
• The Central Government have initiated several
  measures including enunciation of a National
  Policy on Co-operatives and enactment of
  Multi-State Co-operative Societies Act, 2002.
• State Co-operatives are governed under the
  Co-operative Societies Acts enacted by the State
  Governments.
• State Acts still provide a rigid regulatory
  regime
• Many State Governments are reluctant amend their
  Acts to liberalize the control regime.
• This calls for a Constitutional Amendment to
  address the problems of the State Co-operatives
  and also to bring uniformity in control and
  governance these co-operatives.

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• UPA Government has highlighted the need for a
  Constitution Amendment in Co-operative in the
  National Common Minimum Programme
• One of the options can be to bring a
  constitutional Amendment on the lines of 73rd
  Constitutional Amendments, keeping co-operative a
  state subject
• The constitutional amendment is to be limited to
  the three key elements for the empowerment of
  co-operatives -
• voluntary,
• democratic and
• autonomous
• And the three rights of co-operatives -
• the right to elections,
• the right to autonomous management and
• the right to independent professional audit.

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• The Amendment is Proposed to cover
• timely conduct of elections
• maximum time limit for supersession of a managing
  committee
• timely conduct of audit
• uniform tenure of managing committee
• regularly and timely conduct of general body
  meetings
• right of a member for access to information
• audit of the Central and Apex societies by the
  qualified auditors
• compulsory system of filing returns
• provisions for offences and penalties.

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A meeting of Registrar of Co-operative Societies
is proposed to be held in Mid-October 2004
To be followed by

• A Conference of State Co-operative
  Ministers to discuss the Constitutional Amendments

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Co-operative Education and Training

• The Central Sector Scheme for Cooperative
  Education and Training has been in operation
  since the Third Five Year Plan. The Scheme is
  implemented through National Co-operative Union
  of India (NCUI) and National Council for
  Co-operative Training (NCCT). This scheme is
  proposed to be restructured in view of the
  observation of Planning Commission and findings
  of the Evaluation Study sponsored by Ministry of
  Agriculture.

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• The State Governments may consider to provide
  adequate budgetary provisions to State
  Co-operative Unions for conducting co-operative
  education and training programmes.
• The State Governments should sponsor adequate
  number of candidates from Co-operative
  Departments / Co-operative Organisations to
  undergo training programmes conducted by VAMNICOM
  / RICMs / ICMSs.
• The State Governments may watch implementation of
  Co-operative Education Field Projects sponsored
  by the Government of India and implemented by
  NCUI.

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Object of the Scheme

• The scheme aims at providing training to the
  Senior and Middle level personnel of State
  Governments and co-operative institutions in the
  country and education in co-operative techniques
  and principles to office bearers, members of
  co-operatives in particular and to spread
  co-operative awareness in the public at large.

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Funding pattern

• 100 grants-in-aid is provided to NCCT for
  conducting training programmes.
• 100 grants-in-aid is provided to National
  Co-operative Union of India (NCUI) for
  implementing special scheme of Intensification
  of Cooperative Education (through field projects)
  in Cooperatively Under-developed States
• 20 grants-in-aid is provided to NCUI for
  approved activities like education programmes
  for youth and women, publication of books and
  running Data Bank and National Centre for
  Co-operative Education(NCCE).
• Separate allocation for N.E. Region States both
  for Co-operative Education and Training.

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Organisational structure
Co-operative Education
Co-operative Training
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PROPOSED FUNDING PATTERN DURING THE 10TH PLAN.

• Block grant pattern to be adopted for cooperative
  training programmes.
• Corpus fund of Rs.200 crores to be created for
  training in next 5 years. Government of India
  will provide Rs.100 crores on matching basis.
  Balance Rs.100 crore to be mobilized by the NCUI
• Grants would be reduced in proportion to the
  income generated out of the corpus fund during
  the interregnum.
• For co-operative education field projects
  (special schemes), grants-in-aid will be provided
  on sunset basis with 20 reduction every year
  commencing from the year 2004-2005.

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Financial Outlay - 10th Plan
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Basic Mandate of NCDC

• NCDC was set up in March 1963 for planning and
  promoting countrywide programmes of co-operative
  activities, on co-operative principles.
• The NCDC is engaged in the co-operative sector
  development for production, processing,
  marketing, storage, export and import of

• Agricultural Produce
• foodstuffs
• fishery, poultry, sericulture, handlooms, dairy
• SC/ST co-operatives
• cont..

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• industrial goods
• livestock.
• Notified Services
• Water conservation works / services, irrigation,
  micro-irrigation in rural areas
• Animal care / health, disease prevention
• Agricultural insurance and agricultural credit
  and
• Rural sanitation / drainage / sewage systems.

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Specific Scheme being implemented by NCDC

• NCDC implements Central Sector Plan Scheme of
  assistance to NCDC programmes for co-operative
  development.

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Components of Scheme

• 1. Assistance for Co-operative Marketing,
  Processing, Storage Programmes in cooperatively
  under / least developed States / UTs
• 2. Share Capital Participation in Growers
  Co-operative Spinning Mills
• 3. Integrated Co-operative Development Projects
  (ICDP) in selected districts
• 4. The existing scheme of Assistance to National
  Co-operative Federations currently implemented
  directly by DOAC is also proposed to be
  implemented through NCDC
• 5. Rehabilitation of Co-operative Processing
  Units (New Component for Xth Plan) and
• 6. Assistance for Development of Women
  Co-operatives (New Component for Xth Plan).

Outlay Proposed - Rs. 240.24 crores for the Xth
Plan Period
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Pattern of Funding

• Grants component is given by Government of India.
• Loan Component is made available by NCDC on its
  own.
• Prior to Xth Plan Loan component was also
  provided by the Government of India.

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• THANKS