IRMA aspirants

:2gunfire: electronics engineer with 4 yrs. work ex. prerit appearing for irma 2006…different from monotonous mba develop india…a good career … G.K. section is the key… others with rural management as their dream career post here!!

:2gunfire: electronics engineer with 4 yrs. work ex.
appearing for irma 2006.....different from monotonous mba
develop india..a good career ..
G.K. section is the key..
others with rural management as their dream career post here!!
:2gunfire: electronics engineer with 4 yrs. work ex.
appearing for irma 2006.....different from monotonous mba
develop india..a good career ..
G.K. section is the key..
others with rural management as their dream career post here!!

but thats really difficult all the GK questions in IRMA test are all about milk and milk and milkproducts

Entirely different from other exams GK any way to tackle these would be welcome

Right dudes, let's restrict this thread strictly to IRMA GK. For the other sections of the test, there are ample resources available on Pagalguy. Let's begin on Rural GK, please post your questions/articles on the same.

MicroFinance Institutions In India
1. A range of institutions in public sector as well as private sector offers the micro finance services in India. They can be broadly categorized in to two categories namely, formal institutions and informal institutions. The former category comprises of Apex Development Financial Institutions, Commercial Banks, Regional Rural Banks, and Cooperative Banks that provide micro finance services in addition to their general banking activities and are referred to as micro finance service providers. On the other hand, the informal institutions that undertake micro finance services as their main activity are generally referred to as micro Finance Institutions (mFIs). While both private and public ownership are found in the case of formal financial institutions offering micro finance services, the mFIs are mainly in the private sector.
micro Finance Service Providers
2. The micro finance service providers include apex institutions like National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), and, Rashtriya Mahila Kosh (RMK). At the retail level, Commercial Banks, Regional Rural Banks, and, Cooperative banks provide micro finance services. Today, there are about 60,000 retail credit outlets of the formal banking sector in the rural areas comprising 12,000 branches of district level cooperative banks, over 14,000 branches of the Regional Rural Banks (RRBs) and over 30,000 rural and semi-urban branches of commercial banks besides almost 90,000 cooperatives credit societies at the village level. On an average, there is at least one retail credit outlet for about 5,000 rural people. This physical reaching out to the far-flung areas of the country to provide savings, credit and other banking services to the rural society is an unparalleled achievement of the Indian banking system. In the this paper an attempt is made to deal with various aspects relating to emergence of private micro finance industry in the context of prevailing legal and regulatory environment for private sector rural and micro finance operators.
The Emergence of Private Micro finance Industry
3. The micro finance initiative in private sector can be traced to the initiative undertaken by Ms.Ela Bhat for providing banking services to the poor women employed in the unorganised sector in Ahmedabad City of Gujarat State. Shri Mahila SEWA (Self Employed Womens Association) Sahakari Bank was set up in 1974 by registering it as a Urban Cooperative Bank. Since then, the bank is providing banking services to the poor self-employed women working as hawkers, vendors, domestic servant etc. As on March 2003, the mFI had a membership of 30,000, seventy per cent of whom are from urban area. The deposit and loan portfolio stood at Rs 623.9 million ($ 13.86 million) and Rs133.6 million ($2.97 million) respectively. Though the mFI is making profit, yet the SEWA bank model of mFI has not been replicated elsewhere in the country.
4. In the midst of the apparent inadequacies of the formal financial system to cater to the financial needs of the rural poor, NABARD sponsored an action research project in 1987 through an NGO called MYRADA. For this purpose a grant of Rs. 1 million ($22,222) was provided to MYRADA for an R&D; programme related to credit groups. Encouraged by the results of field level experiments in group based approach for lending to the poor, NABARD launched a Pilot Project in 1991-92 in partnership with Non-governmental Organisations (NGOs) for promoting and grooming self help groups (SHGs) of homogeneous members and making savings from existing banks and within the existing legal framework. Steady progress of the pilot project led to the mainstreaming of the SHG-Bank Linkage Programme in 1996 as a normal banking activity of the banks with widespread acceptance. The RBI set the right policy environment by allowing savings bank accounts of informal groups to be opened by the formal banking system. Launched at a time when regulated interest rates were in vogue, the banks were expected to lend to SHGs at the prescribed rates, but the RBI advised the banks not to interfere with the management of affairs of SHGs, particularly on the terms and conditions on which the SHGs disbursed loans to their members.
5. The uniqueness of the micro finance through SHG is that it is a partnership based approach and encouraged NGOs to undertake not only social engineering but also financial intermediation especially in areas where banking network was not satisfactory. The rapid progress achieved in SHG formation, which has now turned into an empowerment movement among women across the country, laid the foundation for emergence of mFIs in India.
mFIs and Legal Forms
6. With the current phase of expansion of the SHG Bank linkage programme and other mF initiatives in the country, the informal micro finance sector in India is now beginning to evolve. The mFIs in India can be broadly sub-divided into three categories of organizational forms as given in Table 1. While there is no published data on private mFIs operating in the country, the number of mFIs is estimated to be around 800. However, not more than 10 mFIs are reported to have an outreach of 100,000 micro finance clients. An overwhelming majority of mFIs are operating on a smaller scale with clients ranging between 500 to 1500 per mFI. The geographical distribution of mFIs is very much lopsided with concentration in the southern India where the rural branch network of formal banks is excellent. It is estimated that the share of mFIs in the total micro credit portfolio of formal & informal institutions is about 8 per cent.
Types of mFIs
Estimated Number*
Legal Acts under which Registered
1. Not for Profit mFIs
a.) NGO - mFIs
400 to 500
Societies Registration Act, 1860 or similar Provincial Acts
Indian Trust Act, 1882
b.) Non-profit Companies
Section 25 of the Companies Act, 1956
2. Mutual Benefit mFIs
a.) Mutually Aided Cooperative Societies (MACS) and similarly set up institutions
200 to 250
Mutually Aided Cooperative Societies Act enacted by State Government
3. For Profit mFIs
a.) Non-Banking Financial Companies (NBFCs)
Indian Companies Act, 1956
Reserve Bank of India Act, 1934
700 - 800
7. NGO mFIs: There are a large number of NGOs that have undertaken the task of financial intermediation. Majority of these NGOs are registered as Trust or Society. Many NGOs have also helped SHGs to organise themselves into federations and these federations are registered as Trusts or Societies. Many of these federations are performing non-financial and financial functions like social and capacity building activities, facilitate training of SHGs, undertake internal audit, promote new groups, and some of these federations are engaged in financial intermediation. The NGO mFIs vary significantly in their size, philosophy and approach. Therefore these NGOs are structurally not the right type of institutions for undertaking financial intermediation activities, as the byelaws of these institutions are generally restrictive in allowing any commercial operations. These organisations by their charter are non-profit organisations and as a result face several problems in borrowing funds from higher financial institutions. The NGO mFIs, which are large in number, are still outside the purview of any financial regulation. These are the institutions for which policy and regulatory framework would need to be established.
8. Non-Profit Companies as mFIs: Many NGOs felt that combining financial intermediation with their core competency activity of social intermediation is not the right path. It was felt that a financial institution including a company set up for this purpose better does banking function. Further, if mFIs are to demonstrate that banking with the poor is indeed profitable and sustainable, it has to function as a distinct institution so that cross subsidisation can be avoided. On account of these factors, NGO mFIs are of late setting up a separateNon-Profit Companies for their micro finance operations. The mFI is prohibited from paying any dividend to its members. In terms of Reserve Bank of Indias Notification dated 13 January 2000, relevant provisions of RBI Act, 1934 as applicable to NBFCs will not apply for NBFCs (i) licensed under Section 25 of Companies Act, 1956, (ii) providing credit not exceeding Rs. 50,000 ($1112) for a business enterprise and Rs. 1,25,000 ($277 for meeting the cost of a dwelling unit to any poor person, and, (iii) not accepting public deposits.
9. Mutual Benefit mFIs: The State Cooperative Acts did not provide for an enabling framework for emergence of business enterprises owned, managed and controlled by the members for their own development. Several State Governments therefore enacted the Mutually Aided Co-operative Societies (MACS) Act for enabling promotion of self-reliant and vibrant co-operative Societies based on thrift and self-help. MACS enjoy the advantages of operational freedom and virtually no interference from government because of the provision in the Act that societies under the Act cannot accept share capital or loan from the State Government. Many of the SHG federations, promoted by NGOs and development agencies of the State Government, have been registered as MACS. Reserve Bank of India, even though they may be providing financial service to its members, does not regulate MACS.
To be continued.......


10. For Profit mFIs: Non Banking Financial Companies (NBFC) are companies registered under Companies Act, 1956 and regulated by Reserve Bank of India. Earlier, NBFCs were not regulated by RBI but in 1997 it was made obligatory for NBFCs to apply to RBI for a certificate of registration and for this certificate NBFCs were to have minimum Net Owned funds of Rs 25 lakhs and this amount has been gradually increased. RBI introduced a new regulatory framework for those NBFCs who want to accept public deposits. All the NBFCs accepting public deposits are subjected to capital adequacy requirements and prudential norms. There are only a few mFIs in the country that are registered as NBFCs. Many mFIs view NBFCs more preferred legal form and are aspiring to be NBFCs but they are finding it difficult to meet the requirements stipulated by RBI. The number of NBFCs having exclusive focus on mF is negligible.

Capital Requirements
11. NGO-mFIs, non-profit companies mFIs, and mutual benefit mFIs are regulated by the specific act in which they are registered and not by the Reserve Bank of India. These are therefore not subjected to minimum capital requirements, prudential norms etc. NGO mFIs to become NBFCs are required to have a minimum entry capital requirement of Rs. 20 million ($ 0.5 million). As regards prudential norms, NBFCs are required to achieve capital adequacy of 12% and to maintain liquid assets of 15% on public deposits.
Foreign Investment

12. Foreign investment by way of equity is permitted in NBFC mFIs subject to a minimum investment of $500,000. In view of the minimum level of investment, only two NBFCs are reported to have been able to raise the foreign investment. However, a large number of NGOs in the development - empowerment are receiving foreign fund by way of grants. At present, over Rs.40, 000 million ($ 889 million) every year flows into India to NGOs for a whole range of activities including micro finance. In a way, foreign donors have facilitated the entry of NGOs into micro finance operations through their grant assistance.
Deposit Mobilisation

13. Not for profit mFIs are barred, by the Reserve Bank of India, from mobilising any type of savings. Mutual benefit mFIs can accept savings from their members. Only rated NBFC mFIs rated by approved credit rating agencies are permitted to accept deposits. The quantum of deposits that could be raised is linked to their net owned funds.

14. Initially, bulk of the funds required by mFIs for onlending to their clients were met by apex institutions like National Bank for Agriculture and Rural Development, Small Industries Development Bank Of India, and, Rashtiya Mahila Kosh. In order to widen the range of lending institutions to mFIs, the Reserve Bank of India has roped in Commercial Banks and Regional Rural Banks to extend credit facilities to mFIs since February 2000. Both public and private banks in the commercial sector have extended sizeable loans to mFIs at interest rate ranging from 8 to 11 per cent per annum. Banks have been given operational freedom to prescribe their own lending norms keeping in view the ground realities. The intention is to augment flow of micro credit through the conduit of mFIs. In regard to external commercial borrowings (ECB) by mFIs, not-for-profit mFIs are not permitted to raise ECB. The current policy effective from 31 January 2004, allows only corporates registered under the Companies Act to access ECB for permitted end use in order to enable them to become globally competitive players.

Interest Rates
15. The interest rates are deregulated not only for private mFIs but also for formal baking sector. In the context of softening of interest rates in the formal banking sector, the comparatively higher interest rate (12 to 24 per cent per annum) charged by the mFIs has become a contentious issue. The high interest rate collected by the mFIs from their poor clients is perceived as exploitative. It is argued that raising interest rates too high could undermine the social and economic impact on poor clients. Since most mFIs have lower business volumes, their transaction costs are far higher than that of the formal banking channels. The high cost structure of mFIs would affect their sustainability in the long run.
Collateral requirements

16. All the legal forms of mFIs have the freedom to waive physical collateral requirements from their clients. The credit policy guidelines of the RBI allow even the formal banks not to insist on any type of collateral and margin requirement for loans upto Rs 50,000 ($1100).

Regulation & Supervision

17. India has a large number of mFIs varying significantly in size, outreach and credit delivery methodologies. Presently, there is no regulatory mechanism in place for mFIs except for those that are registered as NBFCs. As a result, mFIs are not required to follow standard rule and it has allowed many mFIs to be innovative in its approach particularly in designing new products and processes. But the flip side is that the management and governance of mFIs generally remains weak, as there is no compulsion to adopt widely accepted systems, procedures and standards. Because the sector is unregulated, not much is known about their internal health. Following Committees have examined the road map for regulation and supervision of mFIs
Task Force (appointed by NABARD) Report on Regulatory and Supervision Framework for mFIs, 1999. (Kindly see publications Section for a complete report
Working Group (constituted by Government of India) on Legal & Regulation of mFIs, 2002
Informal Groups (appointed by RBI) on Micro Finance which studied issues relating to (i) Structure & Sustainabilty, ii) Funding (iii) Regulations and (iv) Capacity Building, 2003
Advisory Committee (appointed by RBI) on flow of credit to agriculture and related activities from the Banking System, 2004

18. To address the issue of need for a differential regulatory framework, the latest committee sought answers to the following questions and concerns facing private mFIs in the Country:
(i) Is non-existence of a separate differential regulatory framework a criticalbottleneck hindering the growth of the sector?
(ii) Will MFIs be sustainable in medium term? If so, will they continue to focus on the poor?
(iii) Is access to public / member deposit the key issue for their sustainability?
(iv) Can MFIs finance loans for income generation at interest rates, which are sustainable by the rural poor?
(v) Is it possible to evolve commonly agreed standards for MFI sector covering performance, accounting and governance issues,
which can open up possibilities of self-regulation?

(vi) Has the sector reached a critical mass where regulation becomes important?
19. The Committee observed that while a few of the MFIs have reached significant scales of outreach, the MFI sector as a whole is still in evolving phase as is reflected in wide debates ranging around (i) desirability of NGOs taking up financial intermediation, (ii) unproven financial and organizational sustainability of the model, (iii) high transaction costs leading to higher rates of interest being charged to the poor clients, (iv) absence of commonly agreed performance, accounting and governance standards, (v) heavy expectations of low cost funds, including equity and the start up costs, etc.
20. The current debate on development of a regulatory system for the MFIs focuses on three stages. Stage one - to make the MFIs appreciate the need for certain common performance standards, stage two - making it mandatory for the MFIs to get registered with identified or designated institutions and stage three - to encourage development of network of MFIs which could function as quasi Self-Regulatory Organisations (SROs) at a later date or identifying a suitable organisation to handle the regulatory arrangements. The Committee recommended that while the MFIs may continue to work as wholesalers of microCredit by entering into tie-ups with banks and apex development institutions, more experimentation have to be done to satisfy about thesustainability of the MFI model. Such experimentation needs to be encouraged in areas where banks are still not meeting adequate credit demand of the rural poor.

21. In regard to offering thrift products, the Committee felt that, while the NGO-MFIs can continue to extend micro credit services to their clients, they could play an important role in facilitating access of their clients to savings services from the regulated banks. As regards allowing NGO-MFIs to access deposits from public / clients, the Committee considers that in view of the need to protect the interests of depositors, they may not be permitted to accept public deposits unless they comply with the extant regulatory framework of the Reserve Bank of India. As no depositors' interest is involved where they do not accept public deposits, the Reserve Bank of India need not regulate MFIs.
22. As regards the high interest rates being charged by the MFIs, the Committee felt that the lenders to MFIs may ensure that these institutions adopt a cost-plus- reasonable-margin approach in determining the rates of interest on loans to clients.
23. Private mFIs in India, barring a few exceptions, are still fledgling efforts and are therefore unregulated. Their outreach is uneven in terms of geographical spread. They serve micro finance clients with varying quality and using different operating models. Regulatory framework should be considered only after the sustainability of mFI model as a banking enterprise for the poor is clearly established. Experimentation of mFI model needs to be encouraged especially in areas where formal banks are still not meeting adequate credit demand of the rural poor.

An interesting article by IIM-A on the 'Digital Divide' in India. Download the pdf doc.--

mF in India-An Overview
The post nationalisation period in the banking sector witnessed substantial amount of resources being earmarked towards meeting the credit needs of the poor. The banking network underwent an expansion phase without comparables in the world. The branch expansion was synergised with massive manpower recruitment drive for manning such branches. Credit came to be recognized as a remedy for many of the ills of the poverty. Credit packages and programmes were designed based on the perceived needs of the poor. Programmes also underwent qualitative changes based on the experiences gained. Besides the programmes initiated by the Central Government, a large number of credit-based programmes were introduced by the state governments with large resource allocations.
While the underlying objectives were laudable and substantial progress was achieved, credit flow to the poor, and especially to poor women, remained low. This led to initiatives that were institution led, that attempted to converge of the existing strengths of rural banking infrastructure and leverage this to better serve the unbanked poor. The pioneering efforts at this were made by National Bank for Agriculture and Rural Development (NABARD), which was vested with an enviable task of framing appropriate policy for rural credit, provision of technical assistance backed liquidity support to banks, supervision of rural credit institutions and other development initiatives.
NABARD during the early eighties conducted a series of research studies in association with MYRADA (a leading NGO from South India) and also independently which showed that despite having a wide network of rural bank branches that implemented specific poverty alleviation programmes and self-employment opportunities through bank credit for almost two decades, a very large number of the poorest of the poor continued to remain outside the fold of the formal banking system. These studies also showed that the existing banking policies, systems and procedures, and deposit and loan products were perhaps not well suited to meet the most immediate needs of the poor. It also appeared that what the poor really needed was a better access to these services and products, rather than cheap subsidised credit. Against this background, a need was felt for alternative policies, systems and procedures, savings and loan products, other complementary services, and new delivery mechanisms, which would fulfill the requirements of the poorest, especially of the women members of such households. The emphasis therefore was on improving the access of the poor to microFinance (mF) rather than just micro-credit.
The launching of its Pilot phase of the SHG (Self Help Group) Bank Linkage programme in February 1992 could be considered as a landmark development in banking with the poor. The SHG-informal thrift and credit groups of poor came to be recognised as bank clients under the Pilot phase.
The strategy involved forming small, cohesive and participative groups of the poor, encouraging them to pool their thrift regularly and using the pooled thrift to make small interest bearing loans to members, and in the process learning the nuances of financial discipline. Subsequently, bank credit also becomes available to the Group, to augment its resources for lending to its members. It needs to be emphasised that NABARD sees the promotion and bank linking of SHGs not as a credit programme but as part of an overall arrangement for providing financial services to the poor in a sustainable manner and also an empowerment process for the members of these SHGs. NABARD, however, also took a conscious decision to experiment with other successful strategies such as replicating Grameen, wholesaling funds through NGO-mFIs.
The NABARD led Pilot Project commenced with the support of the Central Bank of the country, i.e., Reserve Bank of India, from 1992 onwards aimed at promoting and financing 500 SHGs across the entire country, the SHG- bank linkage strategy has come a long way. The strategy includes financing of SHGs promoted by external facilitators like NGOs, bankers, socially spirited individuals and government agencies, as also promotion of SHGs by banks themselves and financing SHGs directly by banks or indirectly where NGOs and similar organisations act as financial intermediaries as well.

Mainstreaming of SHG Bank linkage programme
The Pilot phase was followed by setting up of a Working Group on NGOs and SHGs by the Reserve Bank of India in 1994, which came out with wide ranging recommendations on internalisation of the SHG concept as a potential intervention tool in the area of banking with the poor. The Reserve Bank of India accepted most of the major recommendations and advised the banks to consider lendings to the SHGs as part of their mainstream rural credit operations. Based on very successful feedback of the pilot run of the Programme, NABARD in 1998 crystalised its Vision for providing access to one third of the rural poor through linking of 1million SHGs by 2007. What followed was massive scaling up of the training and capacity building awareness programmes by NABARD covering a large number of officials and staff of NGOs, banks, government agencies and rural volunteers in SHG promotion, nurturing, appraisal and financing
(microFinance may be defined by the as "provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards").

To be continued...


Shift to the New Paradigm
i) The poor
Perceived thrift as their strength as also as the bonding factor among themselves
Realised that timely and adequate credit was preferable and productive than subsidies and doles.
They needed hassle-free delivery mechanisms.

ii) NGOs

Acted as catalysts of change
Combined social and economic agenda with synergistic effect
Recognised sustainability as the core factor in development.

iii) Banking system

Accepted SHG-bank linkage as a cost effective means of reaching the poor
Accepted peer pressure as collateral substitute for excellent recovery of loans

iv) Government

Formulated supportive policy framework
Encouraged routing of social programmes through SHGs

v) Reserve Bank of India

RBI policy pronouncements on micro Finance led to increased involvement of banks.
Liberalised interest rates and deregulated interest rate structure for micro credit, leading to flexibility in lending rates.


Provided inputs in capacity building for banks and partner agencies
Promoted the idea of organising thrift and credit groups among the NGOs as an add-on activity and encouraged linking them with banks.
Provided loanable funds to banks and financial support to eligible mFIs, to ease the fund flow position to the sector.

E. Highlights of SHG bank linkage programme as on 31 March 2004.

During the period April 2003 to March 2004 - 361,731 new SHGs were financed by banks to a tune of Rs 18.55 billion (US $ 412 million) by way of loans.

Cumulatively, banks have lent Rs 39.04 billion (US $ 867 million) to 1,079,091 SHGs.

NABARD has extended a refinance of Rs 7.06 billion (US $ 156 million) to banks during 2003-04 bring the cumulative refinance amount to Rs 21.24 billion (US $ 472 million).

35,294 branches of 560 banks (Commercial banks- 48; Regional Rural banks-196; & Cooperative banks - 316) situated in 563 districts in the 30 states of the country are participating in the programme.

About 16 million poor households have gained access to formal banking system through SHG bank linkage programme.

Nearly 90% of the groups are women only groups.

Promotional grant assistance
Grant assistance extended by NABARD to various agencies/ institutions for promotion & linkage of self-help groups during the year as well as cumulatively is given below;

(Rs million)
For prom & linkage
(Rs million)
For prom & linkage
RRB- Regional Rural Bank; CCB- Central Cooperative Bank; Prom- promotion & linkage of groups
Capacity building initiatives.
During 2003-04, about 26,200 bank officials, 7,300 NGO staff, 5,900 government officials and 159,000 Self help group members have been trained with grant support from NABARD. In addition, about 300 faculty members of various banks' training establishments were also trained. Cumulatively 687,000 persons have been trained through various SHG related capacity building programmes.
The rural and semi-urban banking network in India includes about 33,000 branches of scheduled commercial banks, 14,500 branches of Regional Rural Banks and 92,000 Primary Agricultural Cooperative Societies
This mission was achieved in March 2004, well ahead of the time span envisaged with active partnership of different stakeholders.


VISION: - To motivate farmers and food processors, and to provide an interactive coupling between technology, economy, environment and society for speedy development of food processing industries to build up a substantial base for production of value added agro food products for domestic and export markets with a strong emphasis on food safety and quality enabling the farmers especially to realize direct benefits of new technology and marketing network and to ensure adequate availability of quality food products for the consumer at economic prices.
MISSION: - To fulfill the VISION so as to contribute to all round economic and social development of India through generation of employment opportunities especially in rural areas.
Food Processing Industry is of enormous significance for Indias development because of the vital linkages and synergies that it promotes between the two pillars of the economy, namely Industry and Agriculture. India is worlds second largest producer of food and has the potential to become number one in due course of time with sustained efforts. The growth potential of this sector is enormous and it is expected that the food production will double in the next 10 years and the consumption of value added food products will grow at a fast pace. This growth of the Food Processing Industry will bring immense benefits to the economy, raising agricultural yields, meeting productivity, creating employment and raising the standard of very large number of people through out the country, specially, in the rural areas. Economic liberalization and rising consumer prosperity is opening up new opportunities for diversification in Food Processing Sector. Liberalization of world trade will open up new vistas for growth.
The Food Processing Industry has been identified as a thrust area for development. This industry is included in the priority lending sector. Most of the Food processing Industries have been exempted from the provisions of industrial licensing under Industries (Development and Regulation) Act, 1951 with the exception of beer and alcoholic drinks and items reserved for Small Scale Sector, like vinegar, bread, bakery, . As far as foreign investment is concerned automatic approval for even 100% equity is available for majority of the processed food items.

The Food Processing Sector

Food processing involves any type of value addition to the agricultural produce starting at the post harvest level. It includes even primary processing like grading, sorting, cutting, seeding, shelling packaging etc.

The sector comprises of the following major areas:

Fruit & Vegetable Major Products
Beverages, Juices, Concentrates, Pulps, Slices, Frozen & Dehydrated products, Wine Potato Wafers/Chips etc.

Fisheries- Major Products
Frozen & Canned products mainly in fresh form.

Meat & Poultry- Major Products
Frozen and packed mainly in fresh form, Egg Powder (only a couple of units).

Milk & Dairy-.Major Products
Whole Milk Powder, Skimmed milk powder, Condensed milk, Ice cream, Butter and Ghee

Grain and Cereals- Major Products
Flour, Bakeries, Biscuits, Starch Glucose, Cornflakes, Malted Foods, Vermicelli, Pasta Foods, Beer and Malt extracts, Grain based Alcohol.

Consumer Industry- Major Products
Chocolates, Confectionery, Soft/Aerated Beverages/Drinks.

PlantationMajor Products
Tea, coffee, cashew, cocoa, coconut etc.


India is already a major producer of food (first in cereals, livestock population, milk and second in fruits and vegetables), producing over 600 million tons of food products, and in case the immense untapped potential of growth is achieved the country can emerge as the largest producer of major food items. Processing level presently being extremely low, the wastage levels are very high resulting in colossal wastage of national wealth running in thousands of crores.Value addition to the raw produce in the country is only seven per cent, compared to as much as 23% in china, 45% in the Philippines and 188 in the U.K.The small scale and unorganized sectors today account for 75% of the total industry having only local presence without much access to knowledge, technology and marketing network.The differential between the farmers realization and the final consumer price is very high in our country even in the fresh produce. In processed food products the high price on account of cumulative effect of low productivity, high cost of raw material, spoilage due to poor infrastructure, inefficient and costly transportation, high cost of finance an high incidence of taxes and duties, leads to the vicious cycle of low demand low capacity utilization high per unit cost low demand.Despite the existence of a strong and wide network of R&D; institutions (CSIR labs, ICAR institutions, ICMR Establishments, Universities and Private institutions), their linkage with the users like farmers and industry, is not well established resulting in lack of technology flow, pure & academic research rather than applied and commercial, lack of involvement of industry in research work, and resource crunch.The unattractive nature and the high risk profile of food processing industry has impeded required flow of credit from financial institutions who are yet to acquire the proper understanding of this sector to attain the requisite levels of appraising skills.Low margins, seasonality and high perishability being the distinct features of this industry, the access to seed capital and working capital is not easy. Despite having been declared a priority-lending sector, there is hardly any growth in capital flow to this industry.Despite vast domestic market size, the present level of processed food marketability is very low but by doing massive awareness and educational campaigns this market could grow higher enough to consume substantial part of any quantum of our processed foods.Indian brands are yet to establish in the international markets calling for a concerted effort to capture world market share in tune with our standing in the production front.With the coming in of WTO regime the country has to prepare for meeting the requisite quality standards in order to compete with imported goods in the domestic market itself. This calls for adoption of high tech machine and technologies as also development of entire chain of the infrastructure.Weak database and lack of market intelligence are the prevailing features of this sector.Poor infrastructure of not only processing but even transportation, ports, airports, storage and handling etc. The backward linkage between the farmer and the processor is yet to take proper shape to tide over the impediments which exist on account of fragmented & small land holdings, erratic production due to natural factors, non uniformity & inconsistent supply of raw material and longer chain of intermediaries. Multiplicity of laws and regulatory authorities throttle the industry in its further growth calling for harmonization of laws, development and administration of standards in consonance with international standards like Codex through a single authority.Prevailing packaging system lacks requisite quality and presentability parameters creating handicap as compared to the imported products.Cooperative institutions and other parastatal organizations are weak and peoples participation, either through Panchayat Raj Institutions or NGOs or farmers organizations, industries association in food sector remains far from adequate.

To be continued..




The Policy will seek to create an appropriate environment for entrepreneurs to set up Food Processing Industries through:

    1. Fiscal initiatives/interventions like rationalization of tax structure on fresh foods as well as processed foods and machinery used for the production of processed foods.
    2. Harmonization & Simplification of food laws by an appropriate enactment to cover all provisions relating to food products so that the existing system of multiple laws is replaced and also covering issues concerning standards Nutrition, Merit goods, futures marketing, equalisation fund etc.
    3. A concerted promotion campaign to create market for processed foods by providing financial assistance to Industry Associations, NGOs/Cooperatives, Private Sector Units, State Government Organization for undertaking generic market promotion.
    4. Efforts to expand the availability of the right kind and quality of raw material round the year by increasing production, improving productivity.
    5. Strengthening of database and market intelligence system through studies and surveys to be conducted in various States to enable planned investment in the appropriate sector matching with the availability of raw material and marketability of processed products.
    6. Strengthening extension services and to the farmers and co-operatives in the areas of post harvest management of agro-produce to encourage creation of pre-processing facilities near the farms like washing, fumigation, packaging etc.
    7. Efforts to encourage setting up of agro-processing facilities as close to the area of production as possible to avoid wastage and reduce transportation cost.
    8. Promotion of investments, both foreign and domestic.
    9. Simplification of documentation and procedures under taxation laws to avoid unnecessary harassment arising out of mere technicalities.

The Policy will facilitate:

    1. Establishment of cold chain, low cost pre-cooling facilities near farms, cold stores and grading, sorting, packing facilities to reduce wastage, improve quality and shelf life of products.
    2. Application of biotechnology, remote sensing technology, energy saving technologies and technologies for environmental protection.
    3. Building up a strong infrastructural base for production of value added products with special emphasis on food safety and quality matching international standards.
    4. Development of Packaging Technologies for individual products, especially cut-fruits & vegetables, so as to increase their shelf life and improve consumer acceptance both in the domestic and international markets.
    5. Development of new technologies in Food Processing & Packaging and also to provide for the mechanism to facilitate quick transfer of technologies to field through a net work of R&D; Institutions having a Central Institute at the national level with satellite institutions located strategically in various regions to cover up the whole Country and to make available the required testing facilities. This could be done by establishing a new institution or strengthening an existing one.
    6. Development of area-specific Agro Food Parks dedicated to processing of the predominant produce of the area e.g., apple in J&K;, pineapple in North East, Lichi in Bihar, Mango in Maharashtra & Andhra Pradesh etc. etc.
    7. Development of Anchor Industrial Centre and/or linkage with Anchor Industrial Units having net work of small processing units.
    8. Development of Agro-industrial multi-products units capable of processing a cluster of trans-seasonal produces.

The Policy will promote:

      • Establishment of a sustained and lasting linkage between the farmers and the processors based on mutual trust and benefits by utilizing the existing infrastructure of cooperative, village panchayats and such other institutions.
      • Development of Futures Market in the best interest of both the farmers and the processors ensuring a minimum price stability to the farmer and a sustained supply of raw material to the processor.
      • Mechanism to reduce the gap between the farm gate price of agro-produce and the final price paid by the consumer.
      • Setting up of an Equalisation Fund to ensure sustained supply of raw material at a particular price level and at the same time to plough back the savings occurring in the eventuality of lower price to make the Fund self-regenerative.

            • FORWARD LINKAGE
        The policy will promote

            • Establishment of a strong linkage between the processor and the market to effect cost economies by elimination of avoidable intermediaries.
            • Establishment of marketing network with an apex body to ensure proper marketing of processed products.
            • Development of marketing capabilities both with regard to infrastructure and quality in order to promote competitive capabilities to face not only the WTO challenge but to undertake exports in a big way.

              V. SPECIAL PROVISION
              The following shall receive higher priority and special consideration in policy and plans

                1. The North Eastern Region, the Hilly Areas, Islands and the ITDP areas in the country to be given not only special attention but also special consideration.
                2. The fiscal incentives like excise duty/sales tax concession and the tax holidays to be provided not only to those units which are set up in these areas but also to those units which though set up outside these areas near the market center, are engaged in processing the produce coming from these areas.
                3. Tax holiday for food processing units, with the exception of liquor, cigarettes and aerated drinks and similar luxury items, for a period of 10 years.
                World Bank Assists Orissa to Address Key Social Development Challenges
                Bhubaneshwar, March 1, 2006: The World Bank today announced a grant of $1,300,000 (approx.) to the Government of Orissa for its planned Orissa Fund For Development Initiatives (OFFDI) aimed at addressing core social development issues facing the state. The grant has been created out of funds provided by the Government of Japan through Japan Social Development Fund Grant which is managed by the World Bank. OFFDI will be implemented in the Districts of Bargarh, Deogarh, Keonjhar and Sambalpur, in addition to Pallahara block of Angul District and Banei block of Sundargargh district.

                Speaking at the launch of the programme, the Orissa Chief Minister, Honble Mr. Naveen Patnaik said, These programs aim to improve livelihoods in a sustainable manner and enhance incomes of the rural poor, particularly skilled workers in the informal sector. I hope this project will strengthen the community based organizations such as self help groups and Vana Samrakshana Samities.

                The key issues, at the center of pro-poor poverty reduction interventions, which OFFDI aims to address include: (1) focus on social inclusion by targeting marginal and vulnerable groups in Orissa; (2) linkage to market through process facilitation (e-market), business development services and (3) creating identity for products through branding. Such initiatives are expected to provide a good framework for linking formal and informal sectors of the economy in new ways that address forward market linkages and provide the support structures for local networks and quality control.

                Orissas handloom sector with its rich tradition and unique design has been the second largest source of employment to those who depend on them. Nevertheless, the number has been steadily decreasing due mainly to lack of markets. OFFDI would enable the Government to create a special registered brand for Orissas handloom in addition to identifying new products and linking them with markets through, among others, e-market. said Sam Thangaraj of the World Bank.

                According to A.K.Tripathy, Development Commissioner-cum-Additional Chief Secretary, Government of Orissa, the aim of OFFDI will be to help the Government of Orissa in partnership with Non-Government Organizations (NGOs) and community based organizations such as weavers cooperatives, private sector and financial institutions to develop sustainable livelihood systems centering on handlooms, sericulture and medicinal plants. This will enable the poor and vulnerable sections of communities, who depend on them, to have regular and improved income.

                Some of the specific initiatives that the Orissa Government plans to undertake under OFFDI include:

                1) Setting up of yarn banks, private auction houses for the sale of silk worm cocoons so that rearers get better prices;
                2) Capacity building of weavers through training programs for their skills improvement;
                3) Establishment of a fee for service center which would provide business development services such as new designs, new product development and marketing services.
                4) Emphasis on cultivation of medicinal plants by farmers on their land and by community based organizations such as Village Forest Protection Committees. This will not only enable farmers to diversify from traditional agriculture but also help the community based organizations to cultivate them on degraded forest and other common land.
                5) Support marketing of medicinal plants and their initial process for value addition

                These initiatives will mainly be implemented through Community Livelihood Action Program (CLAP) through innovative pilot projects to be implemented by NGOs and financially viable weavers cooperatives and community based organizations. These pilots will be approved by the Governments Committee for Community Livelihood Action Program which will also have representatives of NGOs.

                The genesis of OFFDI can be traced to consultative processes involving NGOs and other civil society organizations associated with the preparation of Orissa Economic Revival Loan/Credit that has been named as Orissa Socio Economic Development Program. During consultations, the participants encouraged the Government and the World Bank to focus on sustainable livelihood systems centering on handloom, sericulture and cultivation of medicinal plants as they would help women and other vulnerable sections of society to have increased and regular income.

                Please visit the following websites for regular updates on India's rural/cooperative sectors--

                Folks are requested to share whatever links they have for the rural sector, this will be helpful in preparing for the GK section of IRMA test.

                Towards A Blue Revolution
                Just as the Green Revolution transformed agriculture in the 1960s, there is a need today for a Blue Revolution that will change the approach to water conservation and management. Water, as a critical issue, needs to move to the center stage of policy-making in this country, as this is a time bomb ready to go off any time. The current dispute arising out of Sutlej Yamuna Link (SYL) and Kavery river are a grave indicator towards this problem.
                Most of us live with the delusion that water is an abundant resource, always available whenever we want it. However, ignorance is not always bliss; and India is undergoing a major crisis. By 2025, our annual water requirement is likely to rise by a huge 40 percent to 1,050 billion cubic meters from the current figure of 750 billion m3. Annual per capita water availability has dropped from 5,000 cubic meters in 1947 to less than 2,200 cubic meters now. A UNICEF report expects this figure to decline to 1,600 cubic meters by the next decade, a level determined by the United Nations as significantly "water-stressed".
                Besides the impact of population growth, the demand for freshwater has been rising in response to industrial development, increased reliance on irrigated agriculture, massive urbanization and rising living standards. In this century, while world population has tripled, water withdrawals have increased by over six times. Moreover, the supply of freshwater available to humanity is shrinking, in effect, because many freshwater resources have become increasingly polluted. The World Bank has warned that lack of freshwater is likely to be one of the major factors limiting economic development in the decades to come.
                A water-short world is an inherently unstable world. As the next century dawns, water crises in more and more countries will present obstacles to better living standards and better health and even bring risks of outright conflict over access to scarce freshwater supplies. Finding solutions should become a high priority now. We need to wake up before there is no water in our taps.
                A holistic approach is needed that involves everybody. It is important to use water optimally and find ways for future reuse of water. Major initiatives require the concerted and coordinated efforts of government, industry, technology-providers and the general public. Construction of water harvesting and conservation structures like reservoirs, ponds, channels, etc. is important. Reducing the transmission and distribution losses would also yield significant benefits.
                Industry needs to adopt measures to use less water, conserve more and recycle wastewater. An independent regulatory authority should lay down standards of water consumption and enforce those. The Govt. needs to strictly punish the defaulters and reward the implementers. Financial support and tax benefits need to be part of the overall strategy. With this industry needs to take lead.
                Technology is there with enough success stories. What is needed is a change in attitude and an increased focus on this issue. Politically unpopular steps may need to be taken as pricing of water to better reflect market realities. Interestingly, some recent studies have shown a greater "Willingness to Pay" by the users as compared to the "Willingness to Charge" by the authorities. A realization that water is an expensive resource may act as the best spur for more action on this front. Community involvement and decentralized decision-making may be the best guarantee of success. The time for talk may be soon running out. Unfortunately, the time for action will also not be too long.
                INDIAN AGRICULTUREIntroduction

                India has made lot of progress in agriculture since independence in terms of growth in output, yields and area under many crops. It has gone through a green revolution, a white revolution, a yellow revolution and a blue revolution. Today, India is the largest producer of milk, fruits, cashew nuts, coconuts and tea in the world, the second largest producer of wheat, vegetables, sugar and fish and the third largest producer of tobacco and rice. The per capita availability of food grains has risen in the country from 350 gm in 1951 to near about 400 gm per day now, of milk from less than 125 gm to 226 gm per day and of eggs from 5 to 30 per annum despite the increase in population from 35 crores to 95 crores. At present only 2330 per cent of the farmers are able to derive any benefits of extension services provided by various government agencies and every year about 20 per cent of the crop is lost due to mishandling, spillage, floods, droughts and pests and diseases. In fruits and vegetables the loss is around 30 per cent.


                Agriculture accounts for 22 per cent of the GDP and provides livelihoods to 58 per cent of the country's population. Over the years, the agriculture sector has not received as much attention as other sectors in services and manufacturing. The emerging areas in agriculture like horticulture, floriculture, organic farming, genetic engineering, food processing branding and packaging have high potentials of growth. Development of rural infrastructure, rural extension services, agro-based and food processing industries are essential for generating employment and reducing poverty.

                Indian agriculture suffers from a mismatch between food crops and cash crops, low yields per hectare except for wheat, volatility in production and wide disparities of productivity over regions and crops. Domestic production of pulses and oilseeds are still below the domestic requirements and India imports pulses and edible oils to satisfy domestic demand. India is the second largest producer of rice and wheat in the world, first in pulses production and fourth in coarse grains. A distinct bias in agricultural price support policies in favour of rice and wheat has distorted cropping pattern and input usage. Market for farm output continues to be subject to heavy procurement interventions. A shift from minimum support price system and developing alternative product markets are essential fro crop diversification and broad based agricultural development.

                In recent years there has been considerable emphasis on the development of horticulture and floriculture through the creation of critical infrastructure for cold storage, refrigerated transportation, processing, packaging and quality control. India is the largest producer of coconut, cashew nuts, ginger, turmeric and black pepper and the second largest producer of groundnut, fruits and vegetables. India accounts for 10 per cent of the world fruit production with first rank in the production of banana, sapota and acid lime. India is also the largest producer of milk, the fifth largest producer of egg and the seventh largest producer of egg and the seventh largest producer of meat. It is necessary to improve cold storage and transportation facilities and develop efficient marketing and export networks to optimize the production and export potentialities in respect of these products.

                Food management is inefficient with unsustainable level of food subsidies imposing heavy burden on Government finance. The rural economy and the private sector lack the basic infrastructure to build up sufficient buffer stocks and the country remains vulnerable to weather shocks. In recent years, the Central Government has provided various fiscal incentives for improving rural storage facilities. The Central Government is also providing financial assistance to the State Governments for procurement and distribution of food grains at subsidized rates, particularly to the families below the poverty line.

                The enhanced availability of bank credits through priority lending to agriculture and agro based industries, favorable terms of trade, liberalized domestic and external trade for agricultural products attracted private investment in agriculture in recent years. It is likely that with the appropriate policy initiatives, this process will accelerate in the future.
                Bridge the Digital Divide - Innovation at the Grass Roots
                One of the members of GCMMF, the Banas dairy, has started a unique initiative called the Internet Sewa Project in their district called Banaskantha. This is a village-level effort at bridging the Digital Divide by providing information kiosks at the Village Cooperative level. Each village has one information kiosk, which is the single point of contact for Internet and other e-governance activities for the co-op. Official forms, educational applications and local market prices are provided at the information kiosk so that people do not have to travel all the way to the district headquarters for this information. Go to to see an actual site. To address poor connectivity at some sites, the Banas dairy uses a wireless connection to the Internet. The wireless equipment is cheap since there is only a one-time setup charge and no recurring charges. To improve the farmer members' living standards and to facilitate affordable Internet access services, the district union has also become a local Internet Service Provider (ISP) using these Village Information Kiosks. Today the services are subsidised but the goal is for the kiosks to become self- supporting.

                The present Indian agriculture scenario gives a picture of satisfaction and optimism. Today, India is the largest producer of fruits in the world and second largest producer of vegetables. The country which is self sufficient in food production is also one of the largest producer of milk. With a record production of more than 198 million metric tonnne of foodgrains last year, a fourfold increase over the output in 1947, India has indeed come a long way from the drought years of the mid-1960s when survival depended on ship loads of food aid.

                Agrarian Reforms
                The feudal order inherited from the colonial administration at Independence was stifling agriculture growth. Stratification of rural society into several layers of tenants, subtenants and rentier landlords, almost completely alienated the cultivator from the land. There was scarcely an incentive to invest in land and increase productivity.
                Agrarian reform to abolish the old order and empower the tiller of the land was initiated by several States in the early 1950s through Land Reform legislation. Multiple land tenures were replaced by a simplified uniform system, whereby, almost all cultivators were accorded proprietary rights. The abolition of zamindari was a step towards a more equitable agrarian structure, one that encouraged investment in land and therefore, led to gains in productivity.
                Another major step in agrarian reform was the consolidation of fragmented landholdings through legislation by various States. The Ceiling on Land holding Acts of the 1960s which placed a ceiling on ownership of different categories of land ensured redistribution of surplus land to the rural landless. Land reforms of 1970s provided for redistribution of and leasing out of surplus common village lands to the poor and landless in the rural areas, especially the scheduled castes and tribes.

                Green Revolution
                The agricultural growth in the country saw three phases with the Green Revolution as watershed. The pre-Green Revolution phase was characterised by production gains achieved largely through area expansion. The Green Revolution, marked by productivity increases through the use of high yielding technology and modern inputs, has been the major instrument behind the impressive gains in foodgrain output in India. Foodgrain production increased almost four-fold from about 50 million at Independence to more than 198 million metric tonnne in 1996-97. Per capita availability rose from 395 grams per day to 578 grams in the same period.
                Wheat output rose ten times from 6 million to 69 million metric tons in the past five decades. Rice output was relatively modest with only a fourfold increase from 20 million to 80 million metric tonne. Pulse production rose from about 8 million to nearly 15 million metric tonne. Despite variations in the performance of individual crops and regions, total foodgrain production maintained a growth of 2.7 per cent per annum, which kept ahead of population growth at about 2.2 per cent per cent per annum. In addition, the danger of severe food scarcities became a thing of the past as also the dependence on imports. Unlike the droughts of the mid-1960s, severe droughts in 1979-80 and 1987-88 were tided over largely from reserve domestic stocks. The country could take care of its food security.

                White, Blue and Yellow Revolution
                The third phase of agricultural growth is emanating from the diversification and commercialisation of agriculture to high value crops, horticulture, floriculture, animal husbandry, fisheries and sericulture. There has been commendable progress in the field of dairy, oilseeds, sugarcane and cotton. With 69 million tonne India is one of the largest producers of milk in the world. Milk production quadrupled from 17 million at Independence to 69 million metric tonne at present (popularly known as the White Revolution). Fish production rose from 7.5 million to nearly 50 million metric tonne during the last five decades (Blue Revolution). Oilseed production increased five times from around 5 million to 25 million metric tonne since Independence (Yellow Revolution).
                Sugarcane production has risen fivefold from 57 million to 270 million metric tonne. Cotton production has registered an increase from 3 million to 15 million bales. India is the largest producer of fruit in the world and the second largest producer of vegetables.

                Use of Modern Inputs
                The High Yielding Varieties (HYVs) of seeds formed the core of the modern agricultural technology. Public sector institutions, such as the National Seeds Corporation, the State Farms Corporation of India and the State Seeds Corporations are engaged in the production and multiplication of improved seed and planting material. As a result, the quantity of certified and quality seeds almost negligible at the time of Independence has shown a quantum jump and is currently placed at 7 million quintals. In addition, over 500 private seed companies are engaged in their own research and also supply seed and planting material to the farmers.
                The modern HYVs required associated inputs of irrigation, fertilizer and pesticides to be effective. The Indian farmer was quick to adopt the new practices. The consumption of fertilizers which was less than 70,000 metric tonne in 1950-51, shot to about 15 million metric tonne. Gross area under irrigation increased three times from 22 million hectare. Institutional Credit to agriculture was a mere Rs.240 million at Independence, it is now about Rs.290,000 million.

                Price Policy and Market Support
                Agricultural production received a further impetus from the Agriculture Price Policy of the Government which aims at ensuring that the farmer gets a remunerative price for his produce and that there is no occasion for distress sale. Enforcement of this policy has insulated the farmer from major price fluctuations and provided an assured market for his surpluses. Minimum Support Prices for as many as 24 major agricultural commodities are fixed on the basis of recommendations of the Commission for Agricultural Costs and Prices and the Government organises price support operations through the Food Corporation of India, National Agricultural Cooperative Marketing Federation, Cotton Corporation of India and the Jute Corporation of India.

                Research and Extension Work
                Most of the technologies that have fuelled the Green and other revolutions of the past decades have been generated and disseminated from a research and extension institutional network painstakingly built up in the last fifty years. The national agricultural research system in India, with some 30,000 scientists, is one of the largest in the world. At present, there are 49 Central Research Institutes, 30 National Research Institutes, and several other sub-programmes functioning under the Indian Council of Agricultural Research (ICAR). Two international agricultural research centres, the ICRISAT and International Centre for Genetic Engineering and Biotechnology (ICGEB) are also based in India. In addition, there are 26 State Agricultural Universities and 262 Krishi Vigyan Kendras (KVKs) engaged in the generation, assessment and refinement of technologies.
                The story of extension services in the country is replete with innovations and unrelenting desire to reach the farmers. For dissemination of these technologies to the farmers there are some 110,000 extension personnel in the State governments. Besides, a National Agricultural Extension Management Institute, four regional Extension Education Institutes and State level Farmer Training Centres and agriculture schools conduct farmers training in the new technologies. Information support to agricultural extension has been developed through exhibitions, print media as well as the electronic media. Regular programmes for farmers, including news, weather and price bulletins and other market information are aired through All India Radio, Doordarshan, as well as local radio and Television stations.

                Weak Areas
                Spectacular, as these achievements have been, several worrying issues have surfaced. Among these are the relative tardiness in the rate of growth in comparison to other countries and the uneven spread of benefits of development across crops, regions and sections of the rural populace. The indices of agriculture production with 1989-91=100 as base year, only 116 in the case of India in 1996, 147 for China, 151 for Myanmar and 123 for Pakistan.
                Again, as in other areas, we are not free from problems thrown up in the wake of prosperity. Second-generation worries plague us, concerning the sustainability of the use of our natural resources, particularly, land and water. There are also in place adhoc mechanisms such as market intervention scheme which address similar problems relating to perishable commodities, specially horticultural commodities. Though these interventions are fairly effective, the sheer magnitude of the task suggests that the issues of price and market support require special attention in future.

                Looking Ahead
                While the greatness of our very considerable achievements is a cause for pride and pleasure, the responsibility that we have now to shoulder to overcome the systematic weaknesses and to consolidate upon the inherent strength of the agriculture sector is of a sobering magnitude.
                More than 300 million people remain undernourished, despite all our advances, and in the 21st century food needs of a population over billion people will have to be met. Moreover, the role of agriculture cannot be limited to fulfilling food requirements of the people, but would have to address the issue of providing enhanced incomes to farmers through higher value addition to their produce. Concerns of environmentally sustainable agricultural growth must necessarily be integrated into future development strategies. New agricultural technologies such as those provided by bio-technology will need to be generated, harnessed and rapidly disseminated, if these challenges are to be met.
                It is estimated that by 2007 foodgrain requirement will be of the order of 285 million metric tonne if we are to feed a population of about 1102 million. Future strategies to ensure a minimum growth of 4.5 per cent per annum will envisage implementing agricultural reforms through policy and institutional changes.

                New Management Approach The Central Government may have to move away from what currently appears to be a programmatic approach to a Macro Management mode. While the States must focus on the primary initiatives for the development of agriculture, the Central Government may supplement and complement these efforts and also undertake independent initiatives in areas directly in its purview.

                All about India's rural job guarantee scheme

                Here's a primer on all you want to know about the government's rural job guarantee scheme.
                The World Bank says that more than 30 per cent of the Indian population lives on less than $1 (Rs 43.50) a day, but Indian economists believe the figure of poor -- especially rural poor -- could be much higher.
                We have tried to fight poverty by various means, but have met with little success. So what India needs is something more lasting than patchwork policies to help its millions of poverty stricken people.
                The government feels that the National Rural Employment Guarantee Act can solve that problem, given that it has the potential to provide a livelihood of millions. But will the plan succeed? Why is there resistance to it? What will it cost the nation? Read on. . .
                What does the Bill promise?
                The National Rural Employment Guarantee Bill, 2004 promises wage employment to every rural household, in which adult members volunteer to do unskilled manual work. Through this Bill the government, aims at removing poverty by assuring at least 100 days' employment.
                The word 'poor household' was replaced by 'household' for guaranteeing jobs in every household for one person.
                The original Bill had laid down that it would be applicable only to families living Below the Poverty Line.
                Jobs for rural poor: Will the plan work?
                Who will run the show?
                State governments, Panchayati Raj institutions as well as non-government organisations would be involved in implementing the law.
                Who is the chief designer of the scheme?
                Jean Dreze, a Belgian economist, who is currently with the Delhi School of Economics, is the chief author of the scheme.
                What is the minimum wage promised?
                The minimum daily wage had been pegged at Rs 60.
                How much has been allotted for this purpose?
                The United Progressive Alliance government in the Budget for 2005-06 had raised the allocation for the Rural Development Ministry to Rs 24,000 crore (Rs 240 billion).
                How much will it cost India annually?
                The National Rural Employment Guarantee Act will cost about Rs 40,000 (Rs 400 billion) crore annually.
                According to another estimate, however, it could cost about Rs 50,000 crore (Rs 500 billion) annually, or about slightly less than 2 per cent of GDP.
                Where will the money come from?
                The rural development ministry currently is allocated Rs 24,000 crore (Rs 240 billion) annually for all its schemes. To meet the total cost of the ambitious scheme, states will still have to shell out Rs 4,000 crore (Rs 40 billion). The rest of the Rs 12,000 crore {(Rs 120 billion) assuming the total cost works out to Rs 40,000 crore} might be raised from other schemes whose allocations may now be merged into this project.
                Finance Minister P Chidambaram says that the government will meet the requirement for the job guarantee scheme by:

                1. Normal increase in budgetary support;
                2. Savings from existing employment schemes; and
                3. Additional allocation in gross budgetary support to states.
                Chidambaram said the states' share in the funding is only 10 per cent. In his Budget for 2005-06, Chidambaram had stated that the National Food for Work Programme would be converted into the National Rural Employment Guarantee Scheme with an allocation of Rs 11,000 crore.
                Where will it be first implemented?
                To begin with, as many as 200 districts, including 150 districts under the Food for Work Programme, would be covered under the Bill. It would be extended to all the 600 districts in the country within five years.
                The Bill also provides for unemployment allowances if the job, under the scheme, is not provided in the rural households.
                What is India's rural population?
                According to the last Census, 72 crore (720 million) people lived in rural areas.
                What is the unemployment rate in India?
                Currently it is said to be around 7.8 per cent, unemployment has been rising in India. This has led to a migration of huge numbers of people from rural to urban areas.
                With over 65 per cent of India's population under the age of 35, the country needs to create 6 crore (60 million) jobs over the next five years to prevent the unemployment rate from gaining unmanageable proportions.
                What are the demerits of the Bill?
                1. The decision to provide Rs 60 per day for a guaranteed 100 days rural employment translated to only Rs 500 a month, which is not sufficient to run a family.
                2. The law could lead to friction within a family over selection of the member to be provided the job.
                3. It is feared that in the process women and physically challenged could be left out.
                4. The decision to make the state governments finance 10 per cent of the scheme could lead to financial problems because of the poor financial conditions of some states.
                Why is there more resistance to the scheme?
                Many people feel that the huge cost of the scheme might not be affordable for the country. Some analysts say that this could lead to a sharp rise in interest rates and the nation's fiscal deficit.
                Other critics of the scheme say that this will spawn, nay encourage, corruption.
                1. BACKGROUND Watershed development activity was taken up in the country prior to independence in the state of Maharashtra (then Bombay State) as scarcity relief work during drought years in which contour bunding programme for conservation of moisture and control of soil erosion was mostly undertaken. After independence, during the second five-year plan, soil conservation research, demonstration and training centres were established in different agro-ecological zones. In the State of Uttar Pradesh, the state government established a soil conservation research and demonstration training centre at Rehmankhera. Simultaneously, soil conservation activities on farmers fields were also started in different states for which almost all the states formulated State Soil Conservation Acts based on the model act circulated by Government of India, Ministry of Agriculture. Uttar Pradesh also formulated an Act in the year 1954, which was replaced by the modified act of "U.P. Bhumi Evam Jal Sanrakshan Adhinium, 1963". This was done to overcome the practical problems faced in the implementation of some provisions of the earlier Act. Soil and Water Conservation Boards are established to guide, monitor and take up soil conservation activities in the state. In fact, soil conservation activities taken up earlier were on watershed basis, which have now been renamed as "watershed development programmes".
                Subsequently, a number of schemes and projects like soil conservation in predominantly agricultural lands, soil conservation in drought prone areas (DPAP), soil conservation in chronically drought-affected areas, soil conservation in flood prone areas, soil conservation under desert development programme, soil conservation in catchment areas of dams, that is, river valley projects, Damodar valley project, National Watershed Development Programme for Rainfed Areas (NWDPRA), Million Wells Scheme (MWS), etc. were taken up in different states and different regions.
                In fact, soil conservation activities being labour intensive, were also undertaken as calamity relief measures during floods, droughts, etc. as a measure of sustenance for the poor people of the affected areas. Two major employment generation programmes of National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) had a major component of soil conservation activities.


                  • All these programmes were government-run programmes having negligible ownership by the beneficiaries.
                  • Peoples participation was missing. This has resulted in apathy of the beneficiaries and they never owned the activity.
                  • The entire watershed was not taken up for treatment. Only agricultural lands belonging to farmers were treated. There was partial treatment, and as such common properties/lands were left uncovered. The ridge to valley concept was ignored.
                  • There was no provision for maintenance of works.
                  • Holistic approach was missing, that is, only infrastructural soil conservation works like contour bunding, land leveling, gully plugs, check dams, etc. were constructed with no follow-up of agricultural production activity. It was left to normal production programmes, which was not done in a systematic way. There was a lack of multi-disciplinary approach.
                  • Therefore, since there was lack of participatory approach, local knowledge of beneficiaries and their traditional conservative practices and experiences were not utilized.
                  • Different cost norms and subsidy patterns for different schemes and projects, for the same type of work, created fuss amongst beneficiaries.
                  • There were strict and rigid guidelines, while they should be flexible.
                    3. CHANGES DONE
                    In the decade of the nineties, all soil conservation activities were remodeled, based on past experiences. Major thrust was given on participatory approach in all activities from planning, execution and monitoring of programmes. In fact, now funds are provided for complete watershed treatments. National Watershed Development Programme for Rainfed Areas (NWDPRA) was launched in which a holistic approach including basic soil conservation activities along with production was initiated. At present, two ministries in Government of India are implementing watershed development activities, viz. Ministry of Agriculture and Cooperation (NRM Division) and Ministry of Rural Development (Land Resources Department). Earlier, these ministries followed different guidelines, but now both ministries have adopted common guidelines.
                    Along with government departments, NGOs are also now involved in the implementation of the programme. For ensuring beneficiary participation, Watershed Development Teams (WDTs), Watershed Associations (WAs) and Watershed Committees (WCs) are formulated. These committees are involved at all stages, right from planning to execution and monitoring. Beneficiaries are also supposed to contribute in the execution upto 10 to 20 percent in terms of labour or cash involvement. In fact, earlier programmes executed with no beneficiary contribution resulted in higher cost of works and also lack of ownership by the beneficiaries.
                    Under the 73rd Constitutional Amendment, all village developmental activities are to be undertaken by Panchayats. While guidelines formulated provide for a number of committees and teams, this may result in some conflict of interests. In fact, Panchayati Raj Institute (PRI) is a permanent constitutional body as against temporary teams and committees constituted under watershed management guidelines issued by the Ministry of Agriculture and Cooperation, Government of India. There is a need for having linkage between the two.
                    This issue was thoroughly discussed during the recent International Conference on land and water resource management held at New Delhi in November 2000. It was agreed that the Chairman of the WC would be nominated as the ex-officio member of the Land and Water Management Committee of the Panchayat. This body should take up follow-up activities as well as maintenance of the works. Panchayats may charge or put some levy for generating funds for maintenance of works executed in the project area. This way, proper linkages can be established and there should be no conflict. In fact, the Ministry of Rural Development should issue such directives to State Governments. Each State Government can issue necessary instructions to Panchayats to nominate the Chairman as one of the ex-officio members of the Land and Water Management Committee and ensure proper linkages between panchayats and watershed development programmes. Panchayats themselves may take up the role of Project Implementor (PI) wherever they can take up these activities. However, since Panchayats are responsible for multifarious activities like education, sanitation, health, etc., it will not be proper for them to take up watershed development activities. These works should be entrusted to Watershed Associations (WAs) and Watershed Committees (WCs) given in the guidelines.
                    The other alternative can be as suggested in the guidelines for NWDPRA, that is, the Panchayat should nominate one of their members on the Watershed Committee (WC) or the Watershed Committee should be declared as a sub-committee of the Management Committee under the Panchayati Raj Act. It is worth mentioning here that the "Ralegaon Siddhi Project" in Maharashtra, Tejpura Project in Jhansi and Sukno Majri Project in Chandigarh are all good examples of watershed development activity with peoples participation. This has to be taken as an important national programme and we should encourage a movement for watershed activities, particularly in predominantly rainfed areas. Water harvesting should be a major component of this programme, which will ensure improvement in productivity from rainfed areas besides maintaining ecological balance.

                  ICRISAT to collaborate with CII and Coca Cola Foundation on watershed development.

                  CII - ICRISAT & Coca-Cola Foundation Collaboration for Backward Areas Development through Strategic Intervention in Watershed Development The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT), Confederation of Indian Industry (CII) and the Coca-Cola Foundation will collaborate for sustainable and equitable management of Rural Water Resources Infrastructure and other Natural Resources Management (NRM) through "watershed+" interventions in Dungarpur district in Rajasthan and Thirunelveli district in Tamil Nadu.

                  The objective of the collaboration is to improve the livelihood of poor and marginal farmers in the project villages. Further, this is also to evolve a strategy for rapid up scaling in the region such that optimum scales required for translating development interventions in to significant enhancements of land & water use productivity, agri production and rural incomes are achieved. This will be through plugging gaps in soil and water conservation projects, creating water access for poorly endowed families and efficient use of rainwater for improved agricultural practices. The farmers' income will be further enhanced through diversification into high-value water efficient crops.

                  The collaboration is expected to lead to a Memorandum of Agreement (MoA) between ICRISAT and CII, which will provide a framework for cooperation on NRM and related activities in rainfed areas. ICRISAT and CII will undertake
                  action-research on rainfed agriculture, conjunctive use of water resource and development of policy and institutions for sustainable & equitable management of water and other natural resources. Training and capacity
                  building of target communities will be an important part of this project.

                  Within the framework of the MoA the Coca-Cola Foundation's financial support will be used to implement "watershed+" interventions in Dungarpur and Thirunelveli districts. The Coca-Cola Foundation -- supported by the Company and its bottling partners - works around the world to improve the quality of life in their communities.

                  According to Dr William Dar, Director General of ICRISAT, the collaboration with CII and the Coca Cola Foundation will strengthen the institute's partnership with the private sector to help the farmers in the drylands of
                  India. This collaboration will add to ICRISAT's public-private partnerships, which include collaboration on watershed development with the Sir Dorabjee Tata Trust and the TVS Agricultural Science Research Institute."

                  According to Mr. S. Sen, Dy. Director General, Confederation of Indian Industries (CII), "The CII slogan for the year 2005-06 was 'Inclusive growth' and a number of initiatives have been taken by CII in the Private-Public partnership model to improve the livelihoods of the Bottom of the Pyramid (BOP). CII believes that a third category of partners i.e., knowledge partner is required to provide science and technology inputs. This project being presented here is a first step in this direction." These projects have evolved through CII initiative and it will be facilitating the smooth execution of these projects. CII appreciates the efforts of Coca-Cola India to help forge this linkage between Coca-Cola Foundation and ICRISAT.

                  According to Mr. Deepak Jolly, Vice-President, Public Affairs & Communication, Coca-Cola India, "A rapidly growing population, increasing food requirements and improved lifestyles along with industrial development
                  in the country has resulted in competing demand for finite water resources. To achieve food and fodder security and to tackle the water scarcity problem in the country demands efficient use of rainwater and an overall water
                  management plan. We are happy that our Foundation is supporting two such initiatives where ICRISAT in partnership with CII will be undertaking watershed development projects in Dungarpur and Thirunelveli."

                  The one-year project will have a project outlay of US$ 140,000 entirely supported by the Coca-Cola Foundation. ICRISAT has a long-standing experience in watershed development research. In addition to several watershed projects in the India, the institute has implemented projects in Thailand, Vietnam, China, and Ethiopia. These projects are implemented in partnership with the national agricultural research systems, the private sector, NGOs, and farmers.

                  In ICRISAT's integrated genetic and natural resources management programme, the aim is to use participatory research and development to build the capacities of the farmers and community-based organizations to manage their resources efficiently and sustainably. The immediate result of integrated watershed management is enhanced water availability (both groundwater and surface water) for drinking and agricultural purposes. ICRISAT leverages its strength in quality research to help the poor by building their capacity to help themselves.