1

Capital Formation in Agriculture - A Policy Priority and Expectations from Bankers1

Madam Meena, Principal, College of Agricultural Banking, Faculty members, College of

Agricultural Banking and all leading bankers specializing in priority sector financing and

financial inclusion from across the country. Very good morning! I am privileged to be

here today to deliver the Special Address of the Conference, which would also

provideme a valuable platform for interaction with the leading senior bankers handling

one of the topmost job of dealing with priority sector advances as also the most current

issue of financial inclusion which is of top most priority both to Government as also to

banks.Banking is the backbone to the development of trade, investments and business

and provides crucial credit support for all sectors including agriculture in an economy.

Investment credit to agriculture has emerged as the major driver there by emphasizing

the role of Banks to boost farm level investments.What constitute the capital formation,

what needs to be done to boost investment credit by banks, determinants of farm level

investments, role of RIDF in enhancing investment „for‟ agriculture and certain

expectations from bankers shall form part of my address today.

I. Introduction Capital Formation assumes overriding priority in the context of policy making by

Government and other stake holders as it acts as an indicator in attaining economic

growth. It divulges the potentiality of the investment in the public as well as the private

sectors and gives net addition to the assets created during the year. Capital formation is

more important in agriculture as increasing production and productivity of Indian

agriculture is of paramount concern to keep pace with the increased population, thus

feeding the millions and also in the context of benefiting the majority of small and

marginal farmers engaged in agriculture through increased income against all odds,

major being the vagaries of monsoon.

1 Special Address by Shri H. R. Dave, Deputy Managing Director, National Bank for Agriculture and Rural Development (NABARD) on the Conference of In-Charges of Priority Sector Advances and Financial Inclusion Divisions of Commercial Banks at College of Agricultural Banking (CAB), Pune on 20 November 2014. Assistance provided by Shri K. C. Badatya is gratefully acknowledged.

2

The investment rate in agriculture measured as a ratio of gross capital formation to GDP

to the sector has improved in recent years, which has in fact doubled since 1999-2000.

Currently, private sector constitutes almost 85 per cent of the capital formation in

agriculture. Investment credit has emerged as the major driver there by emphasizing the

role of Banks to boost farm level investments. However, the recent declining trend in

investment credit vis-à-vis crop loan has serious implications for sustaining capital

formation in agriculture.

Investment in agriculture is generally undertaken for acquiring physical assets that

result in the creation of a stream of incremental income over a period of time. Capital

formation through investment in agriculture helps in improving the stock of equipment,

tools and productivity of resources employed, which, in turn, enables the farmers to use

their resources, particularly land and labour, more productively. Creation of capital

goods, thus, is necessary for raising productivity of existing resources and realizing the

long-term growth potential.Therefore, the relationship between capital formation and

thus agricultural growth and consequently poverty alleviation are very well documented.

Public investment reduces rural poverty through improved growth in agricultural

production, agribusiness, rural non-farm employment and lower food prices. While there

are often long time lags between investment and visible impact, investments in

agricultural research, education, and rural infrastructure are often the most effective in

promoting agricultural growth and poverty reduction. A study by Fan et.al (2000)

observed that public investment not only offers the largest poverty reduction per unit of

spending but also leads to the highest economic returns (Table 1).

Table 1: Returns to additional Government Spending in India

No. Sector Returns in Rs. Per Rs.

Spending No. of Poor reduced/

Rs.Million spent

1 Irrigation 1.36 9.7

2 Rural Roads 5.31 123.8

3 Health 0.84 25.5

4 Education 1.39 41.0

5 Power 0.26 3.8

6 Soil & Water Conservation

0.96 22.6

Source: Fan et. al (2000)

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II. Capital Formation in Agriculture Measuring Capital Formation The eminent economist Prof. M. L. Dantwala (1986) emphasized capital formation

„in’and ‘for’agriculture.Accordingly, there are broadly two series that capture capital

formation with regard to agriculture (i) narrow data series and (ii) broad data series.

Central Statistical Organization (CSO) compiles estimates on Capital formation in

agriculture with break-up of public and private investments as part of National Accounts

Statistics (NAS).

Public sector investment includes investment in irrigation schemes and plantations in

forestry sector. Irrigation would account for almost 90 per cent of the gross public capital

formation in agriculture(Bisaliah et al, 2013). Private sector investment includes

investments by (a) farm households and (b) private corporates. Investments made by

farm households on farm equipment, machinery, irrigation, land reclamation and land

improvement are included. Household investments would constitute around 90 per cent

share in private investment. The narrow data series comes closest to capture capital

formation „in‟ (as opposed to „for‟ agriculture) agriculture and this is the official data

series on capital formation with respect to agriculture in India.

The need for a „broader data series‟ was motivated by the fact to have a broader

measure of agricultural capital formation that includes capital formation in activities such

as production of fertilizers and pesticides, development of agricultural markets, rural

roads and communications, agricultural education, research and development of

agricultural technology, rural electrification etc. which form part of capital formation „for‟

agriculture(broad series) as opposed to capital formation „in‟ agriculture(narrow

dataseries). The broad series captures in a much more exhaustive manner agriculture

capital formation. However, the attempts by researchers like Chand(2000; 2001),

Roy(2001) and Gulati et al in developing „broad data series‟ have been in relation to

their individual research work and not directed at constructing a time series continuously

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on public sector investment in agriculture. Thus the „broad series‟ does not fall under the

category of official series which the narrow series qualifies for.

Trends in Agricultural Capital Formation During the eighties and nineties various studies on the trends of capital formation

highlighted the issues on the fall in public investment in agriculture and its adverse

impact on private investment. The complementarity of public and private investment and

consequent inducement effect of public over private investment in agriculture and the

linkages with poverty reduction were strongly emphasized.

The trends in agricultural capital formation especially since the nineties show that the

ratio of Gross Capital Formation in agriculture (GCFA) to GDP from agriculture was

12.69 per cent in 1990-91 has gone through various phases and reached 19.8 per cent

in 2011-12. The ratio reflects the investment rate in agriculture and the increase in this

ratio is reflective of the fact that investment is being ploughed back into the sector

through the income generated from the sector. However, this increase has been more

pronounced during the latter period.

From 1990-91 to 1999-2000(except 1991-92 and 1992-93) the investment rate in

agriculture (captured by the ratio of GCFA to GDP emanating from the sector)

has continuously declined and during the period 1999-2000 to 2003-04 saw a

fluctuating trend. Further, starting 2004-05, there has been a continuous increase

in the ratio (except 2010-11)(Chart I & Annexure I).

In six years i.e., 2005-06 to 2011-12 the investment rate in agriculture jumped

from around 15 per cent (2005-06) to 20 per cent (2011-12). This period also saw

three important developments in the field of agriculture credit: (a) Doubling of

Agriculture Credit Programme (2004-05 to 2007-08), (b) Providing crop loans at 7

per cent throughthe Interest Subvention Scheme for Crop loans (not for term

loans) in 2006-07, and (c) Debt Waiver of agricultural loans in 2008-09.

The ratio of capital formation in agriculture (GCFA) to overall GDP has stagnated

at a level below 3 per cent. The average was 2.69 per cent for the period 1990-

91 to 2011-12.

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Public and Private Sector Capital Formation in Agriculture Investment in agriculture is undertaken by both public as well as by private sectors.

While public sector investment is undertaken for building necessary infrastructure,

private investment in agriculture is made either for augmenting productivity of natural

resources or for undertaking such activities, which supplement income sources of

farmers. Private sector investment includes investments made by private corporates

and households. The corporate sector investment includes investment by organised

corporate bodies like big private companies and unorganised entities like sugar co-

operatives and milk co-operatives. The household sector investment comprises

investment on farm equipment, machinery, irrigation, land improvement and land

reclamation. Private sector constitutes the dominant share in the total GCFA.

During 2011-12 the share of private sector was 85 per cent of the total capital formation

emanating from agriculture sector. During the eighties the public sector share was

around 42 per cent(average) indicating the critical role played by it during post green

3.79 2.69

12.84

19.8

0

5

10

15

20

25

%

Chart 1 : Trends in Capital Formation in Indian Agriculture (at 2004-05 prices)

GCF(AA)to GDP GCF(AA) to GDP(AA)Source: CSO Data, GOI

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revolution in boosting capital formation in agriculture. However, sincethen therehas

been a secular decline in the share of the public sector over the decades (Table 2).In a

scenario where almost 85 per cent of the capital formation comes from the private

sector the role of institutional credit in funding agriculture hardly needs to be

emphasized.

Table 2: Share of public and private sector in total capital formation in Agricultureand allied activities

Sector 1970s 1980s 1990s 2000s 2011-12

Private 66.5 58.3 76.1 81.1 84.9

Public 33.5 41.7 23.9 18.9 15.1 Source: National Accounts Statistics (Quoted in Credit and Capital Formation in Agriculture: A growing disconnect, Pahlavi Chavan, Review of Agrarian Studies, 2014)

Private Sector Capital Formation and Investment Credit Agriculture credit can be classified into short term and long term credit(investment

credit). All banks (Commercial banks, Cooperative banks and RRBs) disburse both

types of loans through the banking system. Crop loans are largely for funding the

working capital requirements of farmers while term loans are utilized for assets

generationat farmer‟s level, thus accentuating capital formation. The available evidence

indicates at the strong association between the term loans disbursed and private sector

capital formation in agriculture (Chart 2 &Table 3). The coefficient of correlation comes

out to be 0.82.

2After taking into account the lagged effect of investment credit on gross capital formation the coefficient of

correlation is positive and significant.

7

Note: GCF figures for 2012-13 and 2013-14 are estimated using linear trend.

Source: CSO for capital formation and NABARD for credit.

Table 3: Private Sector Gross Capital Formation in Agriculture and Long Term Credit-All India(in current prices, Rs. Crore)

Year GCFA in Pvt

sector Long term credit

(Rs. Crore)

LT credit as % GCFA

in Pvt sector

1999-2000 48126 17303 35.95

2000-01 44751 19513 43.60

2001-02 61341 21536 35.11

2002-03 57959 23974 41.36

2003-04 54473 32004 58.75

2004-05 59909 49247 82.20

2005-2006 69204 75136 108.57

2006-2007 75496 90945 120.46

2007-2008 95679 73265 76.57

2008-2009 133655 91447 68.42

2009-2010 151325 107858 71.28

2010-11 161513 132741 82.19

2011-12 195756 114872 58.68

2012-13 194152 133875 68.95

2013-14 219476 138620 63.16

Average(1999 to 2013-14) 108188 74822 67.68

Correlation 0.8

Source: Capital formation figures from CSO, GOI and Long term credit from NABARD

0

50000

100000

150000

200000

250000

` cr

ore

Chart 2: Long term credit (disbursements) and Private sector Gross

Capital formation in Agriculture (` crore)

GCF in Pvt sector Longterm credit(Rs. Crore)

8

During the period 1999-2000 to 2013-14 long term credit emerged as the major driver of

the private sector GCF in agriculture as reflected by the share of LT in PGCFA at 67.68

per cent (Table 3). Thus, capital formation in agriculture is predominantly dependent on

what happens to investment credit.

III. Investment Credit- Role & Trend While analyzing farmer households in Punjab (high productivity state), Andhra Pradesh

(medium productivity state) and Odisha (low productivity State) and attempting the

determinants of Capital formation, an FAO study by Bisaliah et. al. 2013, the critical role

that credit influencing not only capital formation but also productivity of labour and

Gross Value of Output (GVO) at the farm level have been clearly spelt out. The

empirical evidence brought out that credit availment, land and literacy are positively

related to capital formation at the farm level. The coefficients for these came out as

statistically significant. Productivity of labour was found to be positively related to

animal capital, farm machinery, literacy and credit availment.

Credit acts as an enabling and critical input in agriculture production process at the

farmers level. The link is 'indirect' as it provides command over other inputs (and

resources) like fertiliser, seeds, etc. Both Crop loans and investment credit(long term

credit) aid the production process- crop loan in sustaining it while investment credit in

generating the capacity to further expand agricultural production through capital

formation in agriculture. A disquieting feature of agriculture credit in India has been the

declining share of investment credit in total agriculture credit. In 1999-2000 the share of

investment credit in total agriculture credit was 37 per cent which declined to 29 per

cent by 2007-08 and further declined to 22 per cent in 2012-13. For the period 2007-08

to 2012-13 the average share of investment credit to total credit was 27 per cent.

It can be observed from Table 4, during the period 1999-2000 to 2012-2013 investment

credit grew at 11.81 per cent per annum in nominal terms whereas at 11.03 per cent per

annum in real terms. Since, the year 2000 there has been two episodes (2007-08 and

2011-12) of negative growth in investment credit. What is worrying is the plummeting

down of the investment credit growth rate in real terms during 2007-08 to 2012-13. It

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grew at a meagre rate of 2.32 per cent per annum. Interestingly, the period 2007-13

coincided with the interest subvention period for crop loans. Is the subvention scheme

creating a distortion? There is an urgent need to step up the growth rate of investment

credit if we want to en-cash on the green shoots with respects to capital formation in

agriculture. What are the potential areas for banks to lend long term credit to boost

investment credit?

Table 4: Trends in Long Term Credit (Nominal and Real terms) in recent years

Year

Investment Credit (Nominal terms)

Investment Credit (at 2004-05 prices)

Nominal terms(Rs.

Crore)

Annual growth (in %)

Real terms (Rs. Crore)

Annual growth (in %)

1999-00 17,303

19,868

2000-01 19,513 12.77 22,146 11.46

2001-02 21,536 10.37 23,935 8.08

2002-03 23,974 11.32 25,579 6.87

2003-04 32,004 33.49 33,163 29.65

2004-05 49,247 53.88 49,247 48.50

2005-06 75,136 52.57 70,037 42.21

2006-07 90,945 21.04 77,889 11.21

2007-08 73,265 -19.44 57,374 -26.34

2008-09 91,447 24.82 63,571 10.80

2009-10 1,07,858 17.95 66,203 4.14

2010-11 1,32,741 23.07 74,122 11.96

2011-12 1,14,871 -13.46 59,055 -20.33

2012-13* 1,33,875 16.54 68,825 16.54

CAGR(1999-2000 to 2012-13)

19.12 11.0

CAGR(2007-08 to 2012-13)

11.81 2.32

Note: Real series are derived by deflating the nominal series of long term credit by GDP (agriculture) deflator. The derived real series is at constant prices( 2004-05 prices)CAGR: Compound Average Growth Rate, *- Figure for 2011-12 and 2012-13 is provisional

Source: Commercial Bank data from IBA, Coop & RRB data from NABARD

IV. Investment ‘for’ agriculture - Rural Infrastructure – Role of RIDF The importance of investment „for‟ agriculture in terms of creating adequate rural

infrastructure needs adequate thrust. Inadequacy of public investment „for‟ agriculture is

today a matter of general concern. The responsibility for providing adequate investment

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„for‟ agriculture rests with the public sector which later acts as an incentive for

investment „in‟ agriculture through private sector participation. Investment in

infrastructure plays a strategic role in producing large multiplier effects in the economy

with rural and agricultural growth. Rural infrastructure leads to agricultural expansion by

increasing yields, farmers‟ access to markets and availability of institutional finance.

Adequate quality infrastructure in rural areas is enormously required for increasing the

productivity and efficiency of agriculture in the form of improving the credit absorbing

capacity, enhancing the productivity of crops and livestock, generating employment and

increasing farmers‟ income etc. and in the process; it also makes a direct attack on

minimizing the incidence of rural poverty. It has been observed that there has been a

decline in the role of public sector in creating adequate rural infrastructure in rural areas.

Since 1995-96, Rural Infrastructure Development Fund (RIDF) constituting nearly one

fifth of total expenditure on rural infrastructure, has been playing a key role in providing

rural infrastructure projects in rural areas and thus facilitating overall agriculture and

rural development.

With an initial allocation of Rs.2,000 crore, known as tranche I, the RIDF has since been

continued with annual allocation being announced in the Union Budget, current tranche

being the XX tranche (2014-15) with an allocation of Rs. 25,000 crore. The cumulative

number of projects and amount sanctioned as on 31 March 2014 has reached to

5,36,781 and Rs.2,02,607 crore. During the initial years the percentage of

disbursements against the phased amount has declined. This was due to the lower

phasing period for certain projects which later rectified and the implementation period

has been increased which resulted in the better and quicker utilization of RIDF. The

cumulative position of tranche-wise and year-wise sanctions and disbursements is

given in Table 5.

Table 5: Cumulative Sanctions and Disbursements- Tranch-wise (As on 31 March 2014)

(Rs. Crore)

RIDF Tranche

Year Corpus Amount

Sanctioned Amount Phased

Amount Disbursed

Disb. as % of phased amount

11

I-XI 1995-96 to

206-07 50000 50184 50184 44282 88.24

Bharat Nirman

2007-08 to 2010-11

18500 18500 18500 18500 100.00

XII 2006-07 10000 10020 8917 8929 100.14

XIII 2007-08 12000 12508 11105 11004 99.09

XIV 2008-09 14000 14624 13623 12343 90.61

XV 2009-10 14000 15484 14047 11869 84.49

XVI 2010-11 16000 18202 17110 12846 75.08

XVII 2011-12 18000 19761 16767 12294 73.32

XVIII 2012-13 20000 20577 11392 9884 86.77

XIX 2013-14 20000 22747 5123 4891 95.46

Total 192500 202607 166769 146843 88.05 Source: NABARD (2014)

Of the cumulative amount sanctioned upto March 2014, the maximum (43%) has been

for agriculture and other agri related activities (Chart 3). The next in share are roads

(31%) followed by social sector projects (14%) and rural bridges (12%). The social

sector projects mostly included projects under education facilities like schools, drinking

water and health. The sector wise order of share is in commensurate with the norm that

the majority funds to be

utlised for agriculture

and related activities.

The investment in rural

roads with largest

multiplier effect also

facilitates agricultural

production and

productivity as also

poverty alleviation

It has been estimated

that irrigation projects financed under RIDF I to XIX would have created irrigation

potential of 218.4 lakhs ha. and generated recurring employment of 103.5 lakh jobs per

annum (Table 6).

31

14 29

12

14

Chart 3: Share of Amount (%)

Rural Roads

Social Sector

Irrigation

Rural Bridge

Ag. related

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Table 6: Accretion to Rural Infrastructure and Employment

No. Particulars Additional Benefits

1 Irrigation Potential (lakh ha.) 218.40

2 Rural Roads (kms) 3,75,932

3 Rural Bridges (mts.) 8,84,174

4 Gross Domestic Product (Rs. crore) 41,977

5 Recurring Employment (No. of jobs) 1,10,25,072

6 Non Recurring Employment :

A. irrigation (lakh mandays) 31,536

B. Rural Roads and Rural Bridges (lakh mandays) 46,705

C. Others (lakh mandays) 25,311

7 Power Sector

A Hydel Power Generation (MW) 221.75

B System Improvements to minimize T & D Losses

(lakh units / Year) 22,341 Source: NABARD(2014)

IV. Increasing Investment Credit - Expectation from Bankers Investment Credit Achievements – Plummeting year after year

Banks have been able to achieve the overall agricultural credit announced in the

Union Budgets but achievements under investment credit have invariable fallen

short of achieving the term loan component(Table 7). In 2007-08 banks could

achieve around 86 per cent of the Investment credit targets which reduced to 58 per

cent in 2012-13. The percentage of achievement has increased to 69 per cent in

2013-14 but the target was also reduced to Rs.2 lakh crore from the previous year.

Additionally, as per the 12 Five Year Plan(Report of the Working Group on Outreach

of Institutional Finance, Cooperatives and Risk Management, November 2011,

Planning Commission) Investment credit estimated for the first two years of the plan

was Rs.4,40,268 crore. Against this the achievement is 62 per cent. For the 12FYP

as a whole the investment credit target is pegged at Rs.13, 54, 878 crore.

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Table 7: Target and Achievement under Investment Credit(Rs. Crore)

Target Achievement

Achievement as % of Target

2007-08 85000 73264 86

2008-09 120000 91447 76

2009-10 125000 107858 86

2010-11 155000 132741 86

2011-12 195000 114871 59

2012-13 230000 133875 58

2013-14* 200000 138620 69

* Provisional, Source: GOI and NABARD

Private sector capital formation contributes overwhelmingly to total capital

formation in agriculture and the former is largely driven by investment credit. The

recent sluggish performance of investment credit is a cause for concern and there is

an urgent need to raise its share in the total agriculture credit purveyed by various

agencies. The current year (2014-15) budget has instituted a fund of Rs.5,000 crore

with NABARD is a move in the right direction to boost investment credit.

Commercial Banks have been assigned a budgetary target of Rs.1,65,000 crore

under Long Term Credit during 2014-15 as against a total target of Rs.2,25,000

crore for all the agencies.

Tapping the potential for investment credit - Banks to step up financing

NABARD has been preparing Potential Linked Credit Plans (PLPs) at district level

wherein sub sector wise estimates of the potential of investment credit is available.

The PLP estimates are reflective of the ground level potential as these are summed

up from block level upwards. For 2014-15 the sub sector wise potential is elaborated

in Table 8. Banks can prepare Area Development Plans (ADPs) based on the

identified potential funding investment credit projects in their area and can

contemplate making Area Development Plans based on these estimates so that

these can be implemented and monitored at the District level with the involvement of

Bankers and District Officials along with NABARD. Such a move will have the impact

of increasing the flow of investment credit thus adding to the much needed capital

formation at the farm level.

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Table 8: Sector wise Investment Credit Potential for the year 2014-15

Sub Sectors Rs.crore

Water Resources 22,035

Land Development 13,276

Farm Mechanization 44,197

Plantation and Horticulture 25,337

Forestry and Wasteland 2,353

Dairy, Poultry, SGP 5,5157

Fisheries 8,068

Storage, Godowns / Market yard 2,2342

Alternate Sources of Energy (Bio-Gas, Solar, etc,) 3,648

Others (SHG / JLG financing, etc,) 15,737

Total 2,12,150 Source: State Focus Papers, Various States NABARD

Bankers need to enhance their human resource, particularly by recruiting technical

manpowerhorticulture, Dairy, Fisheries, Minor Irrigation, Land Development, etc. at

the branch level. These manpower need to be adequately trained in terms of project

appraisal as also field monitoring of the units created out of credit support.

Banks need to follow an innovative approach in identifying the new and innovative

projects and also systematic procedure in identifying the requisite borrower and also

engage in proper capacity building of the borrower for the purpose for which the

client requires the investment credit. This would lead to proper utilisation of the term

credit and also the viability of the asset created out of credit.

With the increased commercialisation and growing importance of high value and

horticulture related crops, supply chain issueshas been emerging as an important

issue which need to be given adequate thrust with designing of standardized credit

products by banks for financing such projects.

VI. Capital Formation in Agriculture: Issues and Concerns

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The investment is considered to be the prime mover of growth as the amount

invested determines the required growth in income via the operations of multiplier

and accelerator effects. For Indian agriculture, where there is no further scope for

area expansion the deepening of the capital through larger public investments in

land and water is the necessary pre requisite for its growth. Therefore, more of

public investment would lead to higher productivity and growth in agriculture.

Further, given the complementarity/inducement effect between public and private

investment, increased public investment in agriculture would induce more private

investment. A study on the trend of capital formation in agriculturally better

developed states like Andhra Pradesh and Tamil Nadu, it is seen that public capital

formation contributes to a growth in private investments.

The corporate sector can play a vital role in accentuating investments in agriculture

sector. However, it is yet to take place in a big way. It may also be stated that the

corporate sector may not be substitute for public capital formation in terms of volume

and impact.

The rapidly declining farm size and the changing pattern of operational holdings

may be another factor which has affected capital formation in agriculture by the

private sector.

Benami landholders and absentee landlords do not generally show interest in

creating permanent assets in the agriculture as their interests are elsewhere and

hence for this substantial part of land holdings, capital formation does not take

place as banks are also unable to provide term loans due to lack of security.

Similarly, farmers Who take land on lease also do not show much interest in

creating assets in the agriculture sector as their tenure is not certain and is

generally given on an annual basis in view of the fear of creating tenancy rights.

Lack of proper implementation of land reforms in the country has resulted in not

allocating lands to the landless and property rights were not conferred to the

landless tillers. As the landlords owning substantial number of acres of land which

are above the prescribed land ceilings, they are unable to cultivate the entire

16

landholding by themselves and therefore they are not able to invest substantial

amounts for capital formation in this sector.

Small and marginal farmers who account for about 70 per cent of operational

holdings and 29 per cent of the operated area, are generally interested in formation

of capital base but their investible surplus is too limited to allow substantial

investments in fixed assets.

Public and private investments are complementary rather than a substitute for each

other and thus a fall in public investment affects private capital formation in

agriculture.

The Government need to take up the issue of recapitalization of State Cooperative

Agriculture and Rural Development Banks (SCARDBs) which largely funds private

investment agriculture.

A strong Long Term perspective plan for rural infrastructure need to be given a

policy thrust. “Exclusive” planning may be brought out for rural infrastructure based

on economic profile of the States. Sector-wise master plans have been prepared by

some State Governments. Other may prepare similar such master plans for better

policy planning for promoting rural infrastructure. With the announcement in the

Union Budget, such planning would facilitate implementation of projects under

emerging areas like „Rurban‟.Micro infrastructure has been a high impact

infrastructure in rural areas. But the micro infrastructure has not been adequately

addressed both in planning and funding by Government.

References Badatya, K. C. &Mehrortra, Nirupam (2014), Capital Formation & Rural Infrastructure in Agriculture, Paper presented in the National Seminar on Rural Credit held in New Delhi on 24 July 2014

Bisaliah, S. et al. (2013). Investment in Indian Agriculture- Macro and Micro Evidences. New Delhi: Academic Foundation.

Bisaliah, S. et al. (2010) . “Private Capital Formation in Indian Agriculture: An Analysis of Farm Level Data”, Consultancy Report to FAO, Rome.

Chand R. and P. Kumar (2004). “Determinants of Capital Formation and Agriculture Growth: Some New Explorations”, Economic and Political Weekly, December 25.

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Chand, Ramesh (2010), “SAARC Agricultural Vision 2020,” Agricultural Economics Research Review, vol. 23, pp. 197–208.

Chavan Pallavi (2014). “Credit and Capital Formation in Agriculture: A growing disconnect”. Review of Agrarian Studies.

Correa, R. (2008). “Locking in Private Investment in Indian Agriculture”, Institute of South Asian Studies (40), Singapore. November 12.

Dantawala, M.L. (1986). “Strategy of Agricultural Development Since Independence”, in M.L. Dantwala (ed.), Indian Agricultural Development Since Independence. New Delhi: Oxford and IBH Publishing Co.

Gulati A.et at. (2002). “Capital Formation in Indian Agriculture Trends: Composition and Implications for Growth”, Occasional Paper 24, National Bank for Agriculture and Rural Development, Mumbai.

HLC (2009). Report of the High Level Committee of Estimation of Saving and Investment. Ministry of Statistics and Programme Implementation, Government of India, New Delhi.

Shukla, Tara (1965). Capital Formation in Indian Agriculture. Bombay: Vora & Co

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Annexure I Trends in Capital Formation in Indian Agriculture- Some Ratios

Year

GCFA# (in Rs. Crore)

GCFA# (in Rs. Crore)

At 2004-05 Prices

At 2004-05 Prices

Current Prices

Ratio of GCFA to Overall

GDP

Ratio of GCFA to

GDP-Agri.

share of public

sector In GCFA

1990 - 1991 51114 17768 3.79 12.84 20.63

1991 - 1992 35578 14196 2.60 9.12 ```````25.97

1992 - 1993 45760 19421 3.18 11.00 21.96

1993 - 1994 39261 18452 2.58 9.13 26.98

1994 - 1995 36503 19245 2.25 8.11 31.20

1995 - 1996 36034 21251 2.07 8.06 31.50

1996 - 1997 38980 25453 2.08 7.93 27.89

1997 - 1998 41376 29734 2.11 8.64 22.14

1998 - 1999 46890 35569 2.25 9.21 20.72

1999-2000 68589 56793 3.05 13.12 14.99

2000-2001 62109 52926 2.65 11.9 15.23

2001-2002 80718 71696 3.27 14.6 14.37

2002-2003 73514 67522 2.86 14.2 14.01

2003-2004 69921 66691 2.52 12.4 18.14

2004-2005 76096 76096 2.56 13.5 21.27

2005-2006 86604 89943 2.66 14.6 23.02

2006-2007 92057 101102 2.58 14.9 24.97

2007-2008 105741 123317 2.71 16.1 21.99

2008-2009 127127 160347 3.06 19.4 16.18

2009-2010 133162 184526 2.95 20.1 17.04

2010-11 131224 193586 2.69 18.5 15.18

2011-12 146578 234270

19.8 15.07

# GCFA- Gross Capital Formation in Agriculture and Allied Activities

Source:CSO, GOI