agriculture & rural development in india_group 7

8/14/2019 Agriculture & Rural Development in India_Group 7

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Agriculture & Rural Development

in IndiaGroup 7Sameer

Sohail

Sankar

Himanshu

Arun VM


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Indian Agricultural Growth Trends

Agriculture and allied sector contributes ~20% of the total GDP

Provide employment to around 57% Indian population

Agricultural production is low due to

Illiteracy, insufficient finance, and

inadequate marketing of agricultural

products

Lack of modern technologies,

agricultural practices and irrigation

facilities

2SPJIMR-PGPM Group 7


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Vital Statistics

SPJIMR-PGPM Group 7 3

0 %

1 %

2 %

3 %

4 %

5 %

6 %

7 %

8 %

0

200000

400000

600000

800000

1000000

1200000

1990-91

1991-92

1992-93

1994-95

1995-96

1999-00

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Total National Imports

%age AgricultureImports to TotalNational Imports

India'sImports(INR Crs)

0 %

5 %

10 %

15 %

20 %

25 %

0

100000

200000

300000

400000

500000

600000

700000

1990-9

1

1991-9

2

1992-9

3

1994-9

5

1995-9

6

1999-0

0

2002-0

3

2003-0

4

2004-0

5

2005-0

6

2006-0

7

2007-0

8

Total National Exports

%age AgricultureExports to TotalNational Exports

India's

Exports(INR Crs)


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0

1000

2000

3000

4000

5000

6000

FY 04-05

FY 05-06

FY 06-07

FY 07-08

India's Exports of AgriculturalProducts (INR Crs)


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5SPJIMR-PGPM Group 7


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Agro Based Industries

Three types Village, Small scale and Large scale industries

Village Industries owned and run by rural households with

very little capital Investment and a high level of manual

labour. E.g.: Pickles, papad, basket making etc

Small scale industry characterized by medium investment

and semi-automation. E.g. : edible oil and rice mills

Large scale industry involving large investment and a high

level of automation. E.g :Sugar, jute and cotton mills



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Rural marketsGrowth Engine during economy downturn

FMCG Sector

10% Increase In FMCG Rural Market Size Likely, Urban Size To Fall By

25%: ASSOCHAM

Retail Sector

Rural retail market constitutes around 40% of the total size of the Indian

retail market

Auto Sector

Rural markets share in Marutis overall sales during Apr-Jan 2009 has

gone up to 8.5% from 3.5% in the same period last year



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NREGSNational Rural Employment Guarantee Scheme

People can claim work as their right at least 100 days per household and

Govt. will provide employment at minimum wage, else eligible for

unemployment payment

Covers 613 rural districts in the country

4.46 Cr. households provided employment, 215.62 Cr. person days of

labor generated and 27.12 L works taken up

Budget allocation increased to Rs 30,100 Cr. in interim budget 2009-10

Water conservation, irrigation canals, land development, rural connectivity

and flood control activities

Criticism from World Bank policy barrier for economic development



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Domestic agricultural policy overview

Agricultural Price Policy

Primarily focused on wheat and rice National Food Security Mission

(NFSM)

o aims to increase the countryswheat, rice, and pulseproduction

o through dissemination of

improved technologies andfarm management practices


Agricultural Trade Situation

Indian government use high tariffs and non-tariffbarriers to limit imports of agricultural products

Indias average WTO bound agricultural tariff is112 percent

Median applied agricultural duty is 35.2 percent

Some sensitive food items are protected bymuch higher bound duties, ranging from 50 to

150% For most agricultural products, the government

levies

A countervailing duty equal to domestic excisetaxes,

3% education cess (surcharge),

4% special countervailing duty on all direct and

indirect taxes


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HUL Project SHAKTIChanging Lives in Rural India

Shakti is HUL's rural initiative

Objective - creating livelihoods for rural women, organise in Self-Help Groups (SHGs), and improving living standards in rural India.

To empower underprivileged rural women by providing income-generating opportunities, health and hygiene education through

the Shakti Vani programme, and creating access to relevantinformation through the iShakti community portal.

Shakti Vani - social communication programme.

iShakti - the Internet based rural information service



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Started in 2001, now extended to about 80,000 villages in 15 states.

~ 25,000 women entrepreneurs

A typical Shakti entrepreneur earns a sustainable income of about Rs.700

-Rs.1,000 per month, which is double their average household income.

Shakti - working closely with the rural development departments of the

state governments, as well as large number of NGOs across the

geographies it currently operates in.

Focus on training farmers, animal husbandry, generating alternative

income, health & hygiene and infrastructure development.



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Co-Operative Societies

Today, India's Cooperative Movement is the largest in the world.

Development Areas : agricultural research, irrigation systems,and public policy on agriculture, impressive agricultural creditdelivery systems through an extensive network of co-operativesocieties.

Govt. policy on rural/agricultural credit provides

1) Timely and adequate credit to farmers for increasingagricultural production and productivity

2) Better access to institutional credit for the small and marginalfarmers



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Traditional Trade Model



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E-Choupal Business Model

Bypasses Govt.-mandated trading mandis

Less capital investment

USD 3000-6000 setup cost, USD 100pamaintenance cost

Host farmer Sanchalak

Order seed, fertilizers & other products


FarmerITC

E ChoupalConsumer

Sanchalak

i i


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Transaction cost ComparisonMandi&E-Choupal



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Win-Win Model

Benefits to farmers:

Faster processing time, bonuspoints system, cost saving

Easy access to foreignagricultural market data(Chicago Board of Trade)

Accurate market price

knowledge, market trends,weather information, higheryields, sense of empowerment

Soil testing service to improvecrop quality

Rural e-literacy development


Benefits to ITC:

E-Choupal model works asa distributor network forITC

Almost no or very lessinvestment

Good market for ITC

products

Choupal Sagar,telemedicine, ecotourism, traditionalcraft business next

big things in ruralmarket???


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Free Trade Issues in Agriculture

WTOs Agreement on Agriculture (AOA) incorporated three

commitments In market access

Domestic support

Export subsidies

Farm subsidies and support in OECD countries increasing($315 bn in 2004)

India opened up its market leading to increasedvulnerability to highly subsidized imports like tea, coconutand edible oils (Rs. 5000 Cr. in 1995 to Rs. 15000 Cr. in1999-2000)

Food security being compromised on account of tradingbeing done by multi national companies and scrapping ofpublic distribution systems



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Agricultural SWOT


Strengths

-Huge domestic market

-Round the year availability ofseeds and labor

-Wide variety of crops

-Traditional means of livelihoodfor rural populace

Weaknesses

-High working capital requirements

-Low availability and use of technology

-Inadequate linkages between R&Dand industry

-Huge dependence on monsoon (rainfed agriculture)

-Fragmented land holding

Opportunities

-Huge potential for agro basedindustries

-Expanding global reach due tofavorable Govt. policies

Threats

-Affected by extreme weatherconditions like droughts and cyclones

-Emerging economic challenges likeWTO and liberalization etc.

-Migration of youth to urban areas


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agriculture & rural development in india_group 7

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