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

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

4. Regionwise position of Agriculture & Allied Loans (ST & LT); disbursement – Shares in Total (per cent) Region1995-19962001-2002 Northern11.619.9 North Eastern 0.40.5 Eastern6.47.4 Central16.414.1 Western17.114.4 Southern48.043.8 100100

5. Share of Western & Southern Regions continues to be significant at 58% 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 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. 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. 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.

6. National Common Minimum Programme Flow of rural credit to be doubled in the next three years. 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 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. Rural cooperative credit system will be nursed back to health.

7. Action taken to implement NCMP Special credit package announced by Government of India on 18 th June, 2004 for doubling credit flow in next three years and providing credit related relief to farmers. Special credit package announced by Government of India on 18 th 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). 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. 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. Reviewing the system of fixation of scale of finance to meet the realistic credit needs of farmers.

8. 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 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. 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. 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. Formation and financing of SHGs of tenant farmers and oral lessees.

9. Contd… Debt restructuring of farmers under following heads: Debt restructuring of farmers under following heads: 1. Rescheduling /restructuring of loans of farmers in distress. 2. Relief to farmers in arrears. 3. One-Time Settlement (OTS) Scheme. 4. Redemption of Debts of Farmers from non- Institutional Sources. Guidelines issued by RBI/ NABARD for implementation of these measures. Guidelines issued by RBI/ NABARD for implementation of these measures.

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

11. CROP INSURANCE SCHEMES

12. 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.

13. 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). 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). 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) Crop and livestock insurance schemes will be made more effective (CMP)

14. 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.

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

16. Farm Income Insurance Scheme (FIIS) FIIS has been evolved to protect Farm Income of the farmer from production risk and price variation risk. 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. 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. 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. 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 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. The implementation of the Pilot Project on FIIS, is being evaluated through an external agency.

17. 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.

18. …… 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.

19. Following modifications are under consideration of the Government Reduction in Unit Area. Reduction in Unit Area. Stepping-up of the indemnity level. Stepping-up of the indemnity level. Revision of the formula for assessing the Threshold Yield to make it more realistic. 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 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. 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.

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

21. 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. 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 7 th June and 20 th July, 2004 respectively to improve NAIS. A meeting with State Government of Maharashtra and representatives of the farming community was held on 7 th June and 20 th 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. 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. A Joint Group has been constituted to study the improvements required to be made.

22. CO-OPERATION

23. Amendment to the Constitution Constraints 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. Elections are not held regularly. Supersession of Board of Directors and appointment of Administrators for undue longer period. Supersession of Board of Directors and appointment of Administrators for undue longer period. General Body meetings are not held regularly. General Body meetings are not held regularly. Audit is not professional. It is also not conducted in time. 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. 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. Unprofessional management leading to high operational cost and delayed delivery of services to members. Lack of member participation. Lack of member participation. Poor system of monitoring and inadequate checks and balances. Poor system of monitoring and inadequate checks and balances.

24. Due to these constraints: Due to these constraints: Heavy erosion in their democratic and autonomous functioning. Heavy erosion in their democratic and autonomous functioning. Most of the grassroots co-operatives are not self- reliant and heavily dependent on Government Assistance. 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. 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. 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. 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.

25. Initiatives taken by the Central Government Initiatives taken by the Central Government Planning Commission appointed Braham Perkash Committee to recommend a model legislation for guidence of the State Governments. 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. 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 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. 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. 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. The Multi-State Co-operative Societies Act, 1984 has since been replaced by Multi-State Co-operative Societies Act, 2002.

26. The basic role of Government is to provide a legislative and policy framework conducive for development of co-operatives. 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. 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 Co-operatives are governed under the Co-operative Societies Acts enacted by the State Governments. State Acts still provide a rigid regulatory regime State Acts still provide a rigid regulatory regime Many State Governments are reluctant amend their Acts to liberalize the control 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. 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.

27. UPA Government has highlighted the need for a Constitution Amendment in Co-operative in the National Common Minimum Programme 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 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 - The constitutional amendment is to be limited to the three key elements for the empowerment of co-operatives - voluntary, voluntary, democratic and democratic and autonomous autonomous And the three rights of co-operatives - And the three rights of co-operatives - the right to elections, the right to elections, the right to autonomous management and the right to autonomous management and the right to independent professional audit. the right to independent professional audit.

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

29. A meeting of Registrar of Co-operative Societies is proposed to be held in Mid-October 2004 A Conference of State Co-operative Ministers to discuss the Constitutional Amendments To be followed by

30. 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.

31. 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 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 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. The State Governments may watch implementation of Co-operative Education Field Projects sponsored by the Government of India and implemented by NCUI.

32. 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. Object of the Scheme

33. Funding pattern 100% grants-in-aid is provided to NCCT for conducting training programmes. 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 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). 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. Separate allocation for N.E. Region States both for Co-operative Education and Training.

34. Organisational structure Co-operative Education Co-operative Training

35. PROPOSED FUNDING PATTERN DURING THE 10 TH PLAN. Block grant pattern to be adopted for cooperative training programmes. 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 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. 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. 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.

36. Financial Outlay - 10th Plan

37. 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..

38. 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.

39. Specific Scheme being implemented by NCDC NCDC implements Central Sector Plan Scheme of assistance to NCDC programmes for co-operative development.

40. 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

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

42. THANKS