EXECUTIVE SUMMARY

Part A : Overview of State Focus Paper 2006-07 1

.1. Introduction

National Bank for Agriculture and Rural Development, being the apex bank in the country for agriculture and rural development, is mandated with the mission of bringing rural prosperity through effective credit support, institutional development and other innovative initiatives. In line with the expectations, NABARD has been taking several initiatives to promote equitable agricultural development and sustainable rural development through a variety of interventions such as credit planning, SHG-Bank linkage programme, RIDF, institutional development and supervision of RRBs and Cooperative Banks apart from policy advice and technical support for the rural banking system. 1.2 Planning is the cutting edge of development and over the years, the planning process, both credit planning and development planning in the districts, has been decentralised. In order to make accurate planning process at micro level, NABARD has, since 1987-88, taken the initiative of forging a link between the credit planning mechanism of banks and the development planning process of the government by preparing Potential Linked Credit Plans (PLPs) for each district of the country. The main objectives of PLP are to enable the various organisations involved in the process of rural development in directing their efforts in a planned manner, in accordance with potentials available for exploitation and to enable optimum utilisation of scarce financial resources (specifically bank credit) by channeling the same into sectors with growth potential. Thus it is a total Plan document which not only identifies the potentials of the district but also points out the gaps in infrastructure supports which need to be taken care of for exploiting the potentials.

1.3 NABARD had prepared Base Potential Linked Credit Plans (Base PLPs) coterminous with X Five Year Plan period (2002-03 to 2006-07) for all the districts of the state. The credit projections made in the Base PLPs for the year 2006-07 have now revised after having detailed discussions with bankers, various Line Departments of Government , NGOs, developmental agencies, taking into account infrastructural developments and support services, key areas and changes in policy initiatives of GOI, State Government, RBI and NABARD.

1.4 As per revised guidelines issued by RBI, the Annual Credit Plan exercise for 2006-07 will be based on the PLPs prepared by NABARD. Accordingly Pre- PLP meets were convened by LDMs which had been attended by Banks, Line Departments of Government, NGOs and other developmental agencies, to reflect their views and concerns regarding credit potential and deliberate on major financial and socio-economic developments in the District in the last one year and priorities to be set out for inclusion in the PLP. In the meetings, the DDMs/DDOs of NABARD had outlined the requirements of information for preparing the PLP, and had also sensitised the Bankers and Line Departments besides obtaining valuable feedback from all the stakeholders. The PLPs prepared by NABARD, containing block-wise/activity-wise potential will be placed before a Special DCC attended by all members of the DCC/DLRC. The potentials indicated in the PLP will be presented by DDM/DDO which will be thoroughly reviewed prior to finalisation of an implementable District Credit Plan.. Thus, the PLP is now the basis for preparation of the DCPs and it has been an interactive process between all the players concerned.

The Regional Office has also prepared State Focus Paper detailing developments in the rural credit scenario and major issues of development through credit. The state level credit seminar is intended to discuss these bankable potentials with the participating banks, heads of departments of Government and concerned developmental agencies, deliberate on constraints / sectoral issues

and arrive at action plans for infrastructure / policy support so that a well thought out strategy is orchestrated for successful implementation of the credit plan. 1.2. State profile and economy

The State of Orissa occupies 4.74% of India’s landmass and accounts for 3.74% of the country’s population. It comprises of 3 revenue divisions, 30 districts, 58 sub-divisions, 314 blocks and 51057 villages. As per 2001 census, the total population of the State is 367.07 lakh. The percentage of SC and ST population to the State’s total population is 16.2 and 22.21% respectively. The literacy rate is 63.08% against the all India average of 64.8%. The male literacy rate is 75.95% whereas the female literacy rate is 50.51%. The State is a predominantly agrarian economy and has been divided into 10 agro-climatic zones based on land form, topography, climate, soil and crop adaptability. As per the land use classification, the net sown area stands at 60.75 lakh ha. and gross cropped area stands at 86.45 lakh ha. The cropping intensity for the State on an average is 135%. The State situated in a subtropical zone, exhibits a temperate climate with normal average annual rainfall of 1502 mm. It has an immense potential of ground water, mineral wealth, fertile soil and diverse flora and fauna. It has vast untapped potential in the non farm sector as it is famous for its traditional arts and crafts like pattachitra, applique. Despite the rich endowment of the state, the state is still in the transitional stage of development and is classified as backward in terms of development status. This phenomenon can be, among other things, attributed to the following

Traditional farming practices with negligible commercial crops ( less than 2%) Highest incidence of poverty at 47% Frequent occurrence of natural calamities - floods, cyclones and droughts Infrastructurally underdeveloped and tribal dominated, backward KBK region Subsistence level of activity in handlooms, crafts

Keeping in view of the above it is evident that any strategy for development of the state involves (i) building up globally competitive agriculture (ii) exploitation of potentials in sectors like horticulture, pisciculture (iii) financing for handlooms, handicrafts in rural non farm sector (iv) reaching the poor through micro finance (v) convergence of development interventions in KBK egion (vi) strategic use of RIDF funds for rural infrastructure building and disaster proofing. r

1.3. Banking profile

The state has a good network of banks with 1427 branches of commercial banks, 834 branches of 9 RRBs, 316 branches of 17 DCCBs, 53 PCARDBs and 2579 PACs / LAMPS / FSS. The banking system had Rs. 29226.13 crores of deposits and Rs. 20438.74 crores of advances with a CD ratio of 69.93% as on 31 March 2005. While 6 RRBs are in current profit and two RRBs are having accumulated profit achieving sustainable viability, 3 DCCBs were not complying with Sec 11(1) of BR Act, 1949 (AACS) as on 31 March 2005. OSCARD Bank has been under rehabilitation due to its deteriorating financial health. Low recovery level has been a major constraint in accelerating rural credit in the State. The overall recovery level for the State as on 31 March 2005 stood at 60.38%. Public Sector Commercial Banks had a recovery position of 46.13%, RRBs at 72.85% and

ooperative Banks at 64.35%. C

d Level Credit Flow 1.4. Trends in Groun A review of trends in ground level credit flow under Annual Credit Plans in Orissa reveals that there is a small increase in annual credit plan disbursements during 2004-05. (Rs crore)

Year Total ground level credit Growth rate % 2002-2003 2,433.43 (-)2.0 2003-2004 4,550.58 87.0 2004-2005 4,839.13 6.3

An analysis of flow of ground level credit for production and investments under agriculture / allied activities and non farm sector reveals an increasing trend which is poised to take greater increase in the ensuing year in view of GoI’s recent policy initiative to double the farm credit in next three years. The details are as follows:

(Rs.crore)

Purpose 2002-03 Share GR %

2003-04 Share GR% 2004-05 Share GR%

Crop loan 869.51 35.73 15.0 1107.20 24.33 27.0 1480.82 30.60 33.7 Term Loan Agri & Allied

177.37 7.28 1.0 219.68 4.83 24.0 423.21 8.75 92.7

Total Agri loans

1046.88 43.01 13.0 1326.88 29.16 27.0 1904.03 39.35 43.5

NFS 145.62 6.00 -43.0 271.84 5.97 87.0 252.06 5.21 -7.3 OPS 1240.93 50.99 -6.0 2951.85 64.87 138.0 2683.04 55.44 -9.1 Total 2433.43 100.00 -2.0 4550.57 100.00 87.0 4839.13 100.00 6.3 It is a matter of concern that whereas the share of other priority sector (OPS) is high in the ACP disbursements, the growth in agricultural term loans which is essential for capital formation in farm sector in near stagnant. This is basically due to the fact that banks are advancing more for personal and consumer loans. An analysis of agency wise credit flow shows that commercial banks are the largest purveyors of credit ( 63.45%) followed by Cooperative Banks (21.63%) and RRBs ( 13.63%). (Rs. crore)

Agency 2002- 03

Share GR %

2003- 04

Share GR %

2004- 05

Share GR %

CBs 1296.62 53.28 4.4 3118.40 68.53 141.0 3070.52 63.45 SCB/DCCBs 664.58 27.31 13.8 804.57 17.68 21.0 1046.76 21.63 ARDBs 9.34 0.38 100.0 10.45 0.23 11.0 16.28 0.34 RRBs 408.96 16.81 22.6 544.93 11.97 33.0 659.71 13.63 Others 53.93 2.22 -67.0 72.22 1.59 34.0 45.86 0.95 -Total 2433.43 100.00 -2.5 4550.57 100.00 87.0 4839.13 100.00 The flow of credit for priority sector as a whole has increased during 2004-05 indicating a growth rate of 6.34%. Further with the boost given by the GoI’s recent policy initiative to double the farm credit in next three years, the ground level credit in the ensuing year is expected to show an increasing trend especially for agricultural lending thus helping in capital formation and asset creation in farm sector. 1 .5 Spatial Flow of Ground Level Credit

The PLP projections/SAP Targets /GLC(SAP) Achievements for the last three years in KBK and non-KBK districts is indicated in the table given below: (Rs.crore)

2002-2003 2003-2004 2004-2005 Sr. No PLP

Projections

(financial)

SAP Target

SAP Achiev

e- ment

PLP Projectio

ns (financia

l)

SAP Target

SAP Achieve

- ment

PLP Projectio

ns (financia

l)

SAP Target

SAP Achievement

KBK Districts 1 404.17 309.82 288.62 486.9 343.86 462.82 555.15 447.31 544.21

Non KBK Districts 2 2332.24 2179.11 2144.81 2999.99 2381.69 4087.75 3334.2 3062.51 4294.92

Total

2736.41 2488.93 2433.43 3486.89 2725.55 4550.57 3889.35 3509.82 4839.13

The Ground Level Credit flow for Priority Sector from financial institutions for KBK region has been on increase and registered registered a growth rate of 6.3% in 2004-05 over 2003-04. 1.6 Development Financial Assistance Support from NABARD

NABARD over the years, has become major development partner in the state. The performance of the Orissa Regional Office during 2004-05 has been quite gratifying in both business and development parameters with the development financial assistance in the State recording Rs. 992.31 crores.

(Rs. crore)

Short term Loan 2002-03 2003-04 2004-05 SCB/ CCBs 405.79 476.90 460.79

RRBs 54.32 43.31 54.28 Sub- total 460.11 520.21 515.07

Agriculture Term Loan CBs 17.51 5.13 16.05

SCB/ CCBs 19.27 23.10 11.20 SCARDB 11.00 9.62 7.14

RRBs 57.30 66.00 75.80 Sub-total 105.08 103.85 110.19

NFS CBs 29.01 16.56 15.02

SCB/ CCBs 29.27 27.58 24.55 SCARDB 0.00 0.00 0.02

RRBs 106.38 160.50 172.86 Sub-total 164.66 204.64 212.45

Total Sche. Refinance 269.74 308.49 322.64 CBs 46.52 21.69 31.07

SCB/ CCBs 454.33 527.58 496.54 SCARDB 11.00 9.62 7.16

Short term Loan 2002-03 2003-04 2004-05 RRBs 218.00 269.71 302.94

Total Refinance 729.85 828.60 837.71 RIDF Disbursements/ sanctions

182.41 185.10 154.60

Total Dev. Assistance 912.26 1013.70 992.31

1.7. Other developmental interventions by NABARD in the state

Several initiatives have been taken by NABARD in the state of Orissa to bring about sustainable and equitable agriculture and rural development such as micro finance, RIDF assistance, promotional programmes under Rural Non Farm Sector, institutional development interventions in the form of DAP/MoU and ODI etc. NABARD has been sanctioning projects for the infrastructure development of Orissa ever since the advent of RIDF in 1994-95. So far, 54965 projects have been sanctioned to the State of Orissa involving RIDF loan of Rs. 2154 crores and sector-wise details of the same are as under:

(Rs in crores) SECTOR No. Of Projects sanctioned RIDF

Loan sanctione

d Irrigation 54,336 1021.

00 Roads 227 472.0

0 Bridges 361 659.0

0 Others 41 2.00 Total 54,965 2154.

00

In the policy for RIDF XI under implementation during 2005-06, NABARD has expanded the list of eligible purposes. Three new purposes viz., Village Knowledge centres, Desalination plants in coastal areas & Infrastructure for information technology in rural areas have been added to a wide canvas of sectors. Apart from Rural Connectivity, & medium/Minor Irrigation, thrust is being for micro-irrigation, flood control, drainage, rural marketing, rural health, primary education etc. Rural Sanitation is being given a major emphasis, particularly for construction of Pay & use toilets in rural areas, construction of toilet blocks in existing schools, specially for girl students.

Accordingly, the State Government has been asked to prioritise the projects to be posed to NABARD by giving more thrust on all these sectors in their annual development plan. Apart from traditional sectors such as irrigation and roads/ bridges state Government is in the process of formulating projects under rural market yards, veterinary aid centres, drainage, ayurvedic /homeopathic dispensaries, Village Knowledge Centres, etc. Another important feature of the projects being proposed is that the State Government has posed projects under Biju Krushak

Vikas Yojana (BKVY) which involves lift irrigation/ tube wells / Minor Irrigation Schemes to be implemented through Pani Panchayats (Water Users Association). NABARD has been playing a leadership role in upscaling of SHG Bank linkage programme qualitatively through capacity building partners, issuing operational guidance, documentation of best practices leading to impressive progress under the SHG-Bank Linkage programme. As at the end of 31 March 2005, 123256 groups have been provided credit support from banking sector with a bank loan of Rs. 25179 lakhs. Banks availed refinance assistance to the tune of Rs. 8952 lakhs from NABARD in respect of 60545 groups as on 31 March 2005. In order to bring about sustainable employment to rural artisans and entrepreneurs, NABARD has taken several initiatives under Non-farm Sector. District Rural Industries Project (DRIP) is being implemented in undivided Ganjam, Bargarh, Koraput, Sundergarh and Puri with no. Of units created being 1310 as on 31.03.05. The state of Orissa is best recognised for its unique, traditional, colourful and intricate arts and crafts. There are 51 recognised arts and crafts providing second largest employment after agriculture in the state. In order to protect the traditional crafts and infuse new lease of life into them NABARD Orissa Regional Office has identified 7 traditional crafts across the state which are being developed under NPRI Cluster Development Programme. During the year 2004-05, total 54 Rural Entrepreneurship Development Programmes have been sanctioned with a grant assistance of Rs. 25.83 lakh for 1269 beneficiaries. Capacity Building of bankers and NGOs in appraisal of RNFS projects and Women Empowerment is also taken up. Further, to ensure timely and hassle free credit to rural artisans and entrepreneurs Swarojgar Credit Card is under implementation since 2003.

1.8 Credit Projections for 2006-07

The State Credit Plan for 2006-07 has been prepared on the basis of the potentials estimated for various activities in PLPs prepared for all the districts in the State of Orissa. It envisages credit requirement of Rs.6164.26 crores in respect of exploitable potential for different activities under farm, non farm and other priority sectors in the State during 2006-07. The detailed sector wise and district wise projections are given in Annexure AI. The projections indicate 4.3 % increase in agricultural term loan investments and 21.6 % increase for total agricultural loans in total projections over the PLP 2005-06 and 16.46% increase for total Priority sector loans over annual credit plan 2005-06. 1.9 Looking ahead

Orissa is endowed well in terms of natural resources and modernisation of agriculture, market orientation of rural non farm sector and quality upscaling of microfinance programmes are the needs of the hour to ensure rural prosperity in the State. While banks in the State need to play a proactive role in extending financial services to commercialisation of agriculture and allied activities (with particular emphasis on agricultural term lending), emergent market oriented non farm sector and in reaching the unreached poor through microfinance, Government of Orissa and other developmental agencies need to extend effective agricultural extension services, fill in infrastructural gaps identified in the State Focus Paper and support a conducive climate for recovery of loans in order to facilitate our joint mission of ushering in prosperity in rural Orissa.

PART B : Issues for discussions in the State Credit Seminar

GENERAL ISSUES :

There is a need for focus on disbursement of agricultural term loans in view of the recent policy initiative on doubling the farm credit in three years.Further the projections have been made accordingly and stagnant trends have to be corrected.

Banks need to train Branch Managers for credit marketing and relationship banking. Controlling offices need to take charge of timely submission and quality of reporting of

Lead Bank Returns (LBR) Innovative products suiting to different segments of the rural society such as small

farmers, agricultural labourers etc. ( such as joint liability group lending, contract farming ) need to be developed.

SECTORAL ISSUES 1) MINOR IRRIGATION

The potential under MI for the State for the year 2006-07 is estimated at Rs.101.59 crores. Issues :

Issues related to MI development in KBK region: i) The dugwell / borewell and Low lift points are the most feasible Minor Irrigation structures. The feasibility of STW is very limited. Ii) Awareness among the tribals / farmers in respect of farmstead / homestead activities related to their day to day needs is very necessary. iii) More emphasis is necessary for installations of river lift points by the NGO’s / govt. agencies on the behalf of tribals and the dissemination of knowledge of their systematic operation and maintenance. 17. MAJOR CONSTRAINTS & SUGGESTIONS FOR MI DEVELOPMENT CONSTRAINTS (i) One of the major constraints in the development of this sector is the inclination of farmers for subsidy oriented programmes / schemes. ii) Delay in energisation, high cost of energisation, and arbitrary costing causes demotivation to go for energisation of irrigation structures. The energy department in consultation with GRIDCO should provide concessional facility for agricultural connections. iii) Though attractive subsidy has been announced by Govt. of India and state Govt. for various irrigation schemes, lack of mass awareness about the benefits is the main cause of slow progress. Credit linkage for such programme is also very poor despite provision in SAP & PLCPs. SUGGESTIONS i) Selection of proper site, construction of irrigation structures as per proper design and energisation are three important aspects of economic exploitation of groundwater. The state govt.

may frame a clear policy for energisation in irrigation sector in view of the power sector reforms in the state. ii) Benefit of irrigation can be reaped only when suitable crop rotation with recommended package of practices are observed. Demonstration plot in each panchayat should be arranged by Govt. with innovative irrigation techniques and scientific agricultural practices which will have a direct impact on the farmers. Krishi Sahayak Kendras and Krishi Vigyan Kendras, field functionaries of agriculture and horticulture department should launch vigorous mass awareness programme on efficient irrigation techniques like sprinkler and drip systems. NGOs, VVVs, Farmers' Clubs and bankers should be closely associated in such programmes. iii) Formation of Water Users' Association in command area of all irrigation projects should be made compulsory. WUAs will take over the operation, maintenance and management of projects under supervision and guidance of the concerned department. The state govt. may enact a legislation to this effect and issue the policy guidelines. iv) Participation of private parties having expertise, competence and reputation should be allowed in all Govt. sponsored programmes especially for marketing of pump sets & construction of borewells / tubewells. If need arises, such parties be registered and a list should be made available to concerned departments both at District and Block Level. 2. LAND DEVELOPMENT

The Potential for the State under the sector is estimated at 46.30 crores Issues: Inadequate use of inputs and under utilisation of potential Need for integrated farming system on watershed basis. Lack of awareness of modern concepts of package and practices. Need of a long term strategic plan to combat drought and flood and completion of soil

conservation and watershed projects particularly in the KBK zone. Need for diversifying the cropping pattern to include cash crops, oilseeds etc. In hilly areas dominated by tribals, to avoid shifting cultivation, land may be leased to them

giving them usufructuary rights. 3. FARM MECHANISATION

The potential for the State under the sector is estimated at Rs. 210.14 crores. Issues:

i The quantum and rate of subsidy for power tillers should be increased which is likely to nefit be small/marginal farmers.

ii Subsidy shall also be made applicable for second hand tractors. iii State Government should promote Paddy threshers initially on a pilot basis and subsequently an Area Development Banking plan in all paddy cultivated districts needs to be

repared and implemented. If required, the services of NABCONS may be availed for the same. p

4. STORAGE GODOWN & MARKET YARD

The potential under this sector for the State is Rs.71.17 crores.

Godowns

omotional initiatives by GOO may provide the desired enthusiasm for the rmers/individuals.

State sponsored elf employment programmes, so as to encourage educated unemployed youth.

ural godowns through HGs by grant of subsidy in addition to the subsidy available under CISS.

ges to OSWC or any other concerned institution so as to make the receipts valid for ledge loan.

shall also extent financial assistance under softer terms to SHGs taking up godowns chemes.

i)

ii)

i) esponsibility for right choice of promoters and establishment of units in potential pockets.

ntial under this sector for the State is estimated at Rs.114.32 crores.

Issues 1. The capacity available or created so far are mainly of intermediate or bulk storage category owned by OSWC, which are generally not accessible by the farmers in the remote villages. The storage capacity for primary storage at village level is negligible at present, which is the main reason for distress sale. Therefore, the GoO may allocate a considerable share for primary storage and motivate individual or group of farmers to take up godown in villages. Awareness compaign and other prfa 2. GOO may also make the godown as an eligible activity under various Central/s 3. As SHGs are becoming strong in rural areas, godowns can also be promoted through them, so that the farmers has an easy access to storage facility. GoO may promote rS 4. GoO may also formulate appropriate accreditation scheme for affiliating private godowns located at villap 5. The ongoing centrally sponsored scheme viz., Capital Investment Subsidy Scheme for RuralGodowns involving capital subsidy to the extent of 25%, may also be popularised by the DMI. 6. Banks s

Cold Storages

Suggestions:

As the production of potato in the State is just 25 to 30% of its demand, the Department of Agriculture needs to plan for increased area under potato every year. Local production will not only increase the scope for cold storage potential, but also reduces the cost to a considerable extent. The details of Capital Investment Subsidy Scheme are to be disseminated at deeper levels by GoI and related departments. As the scheme is now extended for entire X Five Year Plan period, the scheme details should reach the prospective entrepreneurs. GoI should make use of all modes of communication to spread the information. Agencies like DIC and APICOL, can also take added rii

5. PLANTATION AND HORTICULTURE The pote Issues:

Problems and constraints

The major problems faced by the Horticulture sector in the state are i. Small land holding size of less than 1.0 ha inhibits rapid growth in the sector. ii. Low productivity due to adoption of traditional methods of cultivation results in lower economic returns. iii. Highly fluctuating prices of horticultural produce and inade

aquate marketing

str

scourages liberal credit

ki rearing center, cocoon drying and marketing facilities for elopment.

e ntity

ava and aya

tivity - Coffee Board,

t.

1. High density planting in mango and guava may be encouraged - Hort. Dept.

ntial under this sector for the State is estimated at Rs.29.57 crores.

v

in potential areas in addition to development and proper maintenance of permanent nurseries.

infr ucture. iv. Non availability of adequate quality planting material/ seed material. v. Inadequate post harvest facilities like cold storage and pre-cooling units, cool chain. vi. Inadequate extension services provided by the line department and budgetary constraints faced by these Departments. vii. Lack of awareness at bankers and farmers level in respect of various schemes which can be availed for horticultural activities in the state.

viii. The problems of long over dues/ willful default of bank loans disupport.

long gestation horticultural crops. ix. Bankers some time discouragex. Lack of coordination amongst developmental agencies and financing institutions. xi. In adequate supply of spawn

ii. Inadequate chawxSericulture dev Action points 1. Non availability of quality planting material of superior variety, timely and in adequatqua - Dept. of Hort. and banks 2. Lack of linkage of Horticulture development with the processing Industry - State Govt. 3. Inadequate supply of tissue culture banana plant inspite of demand - State Govt. 4. Inadequate focus on commercial cultivation of fruit crops like Sapota, GuPap - State Govt. 5. SHGs linked vegetable production for nutritional and economic security - Banks 6. Development of floriculture should be given priority - State Govt. 7. Slow progress in private coffee plantation, inspite of high producState Govt. 8. Development of horticulture through contract system - State Govt. 9. Defunct state nurseries may be given on lease to private nurseries - State Gov0. Dry land horticulture may be given importance in the state - Hort. Dept. 1

1

6. FORESTRY & WASTELAND DEVELOPMENT The pote Issues: Action Points:

Go ernment:

In order to ensure availability of quality seedlings and timely supply of planting materials of desired species, a good no of temporary nurseries should be developed

Government may consider evolving a suitable policy for development bamboo sector , which has the potential to contribute significantly towards poverty alleviation, employment generation and rehabilitation of degraded/waste land.

With a view to promote cultivation of Tree Borne Oilseeds like Jatropha, Karanja etc in the degraded/wasteland, Government may consider development of suitable infrastructure for cultivation, processing and marketing of such crops.

Government may consider leasing out non-forest wasteland to entrepreneurs/corporates for raising farm forestry/ agro forestry.

Necessary infrastructure facilities for processing of NTFPs should be developed and marketing facilities to be developed for the processed products.

A survey of wastelands may be undertaken to assess the ownership wise distribution( i.e forest/ revenue/ private) as well as the status of degradation, for facilitating preparation of need ba es d developmental plan.

The Forest Department should organise awareness camps to educate the people and help them in realising the importance of forestry. NGOs with good tack record may be involved for

romotion of the sector. p

such activities by way of

e banks should increase their credit outflow due to their wide reach and rural

appraisal of forestry projects and develop expertise for

steps for reasi this sector, by availing refinance at a reduced rate.

. ANIMAL HUSBANDRY

airy

he potential for the State under the sector is 86.31 crores.

sues:

ies may also be advised to follow feeding practices

nufacture of indigenous milk products such as panneer, khoa and ghee are to be encouraged.

Banks: Forestry projects being long gestation in nature, banks generally do not show much interest

in financing such projects in fear of non- repayment of loan by the borrowers. For this reason, the ground level credit for the sector is significantly less as compared to other sectors, despite having potential for development. Banks should adopt a proactive role in popularising the contract farming by extending necessary credit support for implementing the industry sponsored farm forestry projects. Banks should consider allowing incentives to farmers taking up

charging concessional rate of interest on liberal terms and conditions. In view of the importance of the sector, the financing banks particularly RRBs and

cooperativpresence. Banks should train their own staff in

speedy disposal of pending proposals. Since 100% refinance is available from NABARD, banks may take necessary

inc ng the flow of credit under 7 D T Is Banks

SGSY beneficiaries complain against drastic drop in milk yields (to the extent of 50% over the milk yield at the time of purchase) in case of C.B. Cows purchased from A.P. Payment of 50% money at the time of purchase and remaining 50% based on the average one week’s milk yield may be followed. Further, beneficiarof the seller to maintain milk production.

Calf rearing, heifer rearing and commercial dairy proposals are to be encouraged Milk Processing schemes both in large scale and in small scale for ma

SHGs may be grouped as fodder groups, dairy farming groups, processing groups - Khoa, ghee and panneer and linkages among them are to be established and financed for the respective activities.

Chaff cutter may also be included in the outlay of dairy units. Area/cluster approach may be followed in dairy financing to ensure organised milk

collection by OMFED and private dairies. Availability of milk at 4.5 litre per km. has to be ensured for extension or introduction of milk route by OMFED.

Gomitras may be financed for setting up mini dairy units under venture Capital scheme in other than operation flood districts and under schematic lending in operation flood districts.

Finance for setting up of private veterinary clinics may be taken up in developed districts such as Cuttack, Puri, Dhenkanal, Balasore and Ganjam.

Quality financing under the Venture Capital Scheme of GoI. S.T. Loan for fodder cultivation may also be extended for dairy units Bank loans may be extended for Gauchar Land development for fodder cultivation Inclusion of fodder cultivation in scales of finance.

tation for the production of exotic semen may be established at

istricts with high

asture lands may be leased to dairy societies on long term basis popularised and the farmers are trained

eason wise and district wise. isation of Venture Capital Scheme of GoI.

lk collection units may be procurement

DoAH

AI operations may be strengthened Financial and functional autonomy may be given to OLRDS

Another frozen semen breeding sChipilima, Sambalpur district In Bhadrak, Jajpur, Balasore, Koraput, Malakangir, Kendrapada, Angul, Nawrangpur, Phulbani, Boudh, Rayagada, Naupada, Bolangir, Dhenkanal and Ganjam districts, more AI centres need to be opened. Even the services of good NGOs may be availed to increase AI coverage in these districts. Performance of AI centres also needs to be improved. Castration of local bulls, calf protection and fodder cultivation should also be encouraged to make cross breeding programme successful.

AI charges need to be increased from the present Rs.5-7 to Rs.20 per AI to make OLRDS self sustainable SGSY beneficiaries complain against drastic drop in milk yields (to the extent of 50% over the milk yield at the time of purchase) in case of C.B. Cows purchased from A.P. Beneficiaries may be advised proper feeding practices to maintain milk production. Further, methodology followed at the

More number of veterinary dispensaries may be opened especially in the dpotential for AH activities.

Refrigerators may be provided in veterinary dispensaries to stock vaccines Vacancies in the veterinary hospitals may be filled up

Govt./Common p Techniques such as urea treatment of straws may be

in the technique Fodder demonstration plots are to be developed Fodder availability and demand is to be assessed s Popular Well organised Livestock markets may be set up.

OMFED More milk routes may be provided in Angul district.

d automatic mi Milk houses, milko testers, bulk milk coolers anestablished by OMFED to ensure proper milk collection and

OMFED and milk unions may reduce cost of concentrate feed. Fodder demonstra tion plots are to be developed.

istricts rapada

Higher milk price for clean milk production under Venture Capital Scheme of GoI. rtite agreement may be entered into with banks and beneficiaries to credit milk

proceeds to the dairy loan accounts

ential under this sector is 40.30 crores

roiler hatcheries, Contract

g farms for low input technology birds under

ng contract farming in maize especillay in Ganjam, Gajapati, Nawrangpur, Bolangir,

ms in western

r poultry under Agri Clinic scheme a districts.

nding S.T. Loan for maize cultivation and inclusion of maize cultivation in scales of

g maize

oAH LFED

ularising Venture Capital Scheme of GoI. Khaki campbell ducks may be supplied for duckery units

Is u

Techniques such as urea treatment of straws may be popularised and the farmers are trained in the technique.

evive defunct dairy societies in Deogarh,Steps are to be initiated to r Gajapati, Kandhamal Kendrapada, Malkangiri, Mayurbhanj, Nawrangpur, Rayagada and Kalahandi districts.

Streamlining of milk procurement in Ganjam and Gajapati d Extension of milk routes in Kalahandi, Nayagarh, Rayagada, Sambalpur and Kend

districts Strenthening of Women Dairy Project in Sambalpur district.

Tripa

Poultry The potIssues:

Banks Financing for commercial layer and Broiler units, Com. Layer & Bbroiler farming. Financing central grower units and BreedinVenture Capital fund of GoI. Also financing satellite layer units. PromotiKhurda, Keonjhar and Mayurbhanj districts. Financing for Environmental Controlled broiler units and broiler breeding farOrissa.

Encouraging broiler meat processing schemes, retail poultry dressing units, and egg cart/broiler cart schemes under the Venture Capital Scheme of GoI.

raja Financing SHGs for setting up backyard poultry units with Vanaraja, Giri Financing for setting up feed mixing plants, feed analytical labs under Venture Capital

Scheme of GoI. Financing Disease diagnostic laboratories, feed supply fo Financing for egg cold storage in Bolangir, Ganjam and Khurd Exte

finance. Financing for setting up of godowns for stockin

D

Strengthening OPO Pop

Sheep/Goat /Piggery

es: s Banks

Financing for Goat rearing, Goat rearing with Boer bucks, Boer breeding farms and sheep rearing with Nellore rams

Ato sheep and goatery units and AI

aged. Setting up of modern abattoir Pursuing with the municipalities for setting up of scientific slaughter houses for hygienic

meat production Stringent quality control checks in meat processing Availability of PPR vaccine may be improved Promoting leather processing units in cluster approach

Financing SHGs for ram lamb/kid rearing units Financing working capital to butchers, sheep/goat rearing units to farmers in cluster/integrated approach. Financing silvipasture schemes Financing meat processing units

Do H

eding bucks Supply of Nellore breeding rams and Boer brewith Boer semen may be taken up.

Sale of sheep/goat for meat by weight basis may be encour

8. FISHERIES

The potential under this sector is estimated at Rs. 82.03 crores. Issues:

Freshwater Fisheries: a. tilisation of existing tanks/ponds: U

To enhance production in a cost effective manner, development of the existing tanks/ponds rath new tanks/ponds may be taken up on a priority basis. Effort of the State er than creation ofGovt. to lease out selected water bodies on a long-term basis (5-7 years) is a welcome step. As on date SHGs. In order to 7338 tanks with 9079.68 ha. area have already been leased out to 5164 ensure effective implementation of the said policy, following are suggested. i. , these derelict water bodies may be developed/renovated under various Before leasing out

Govt. sponsored schemes like SGSY, NFFWP/RSVY etc. ii. Better coordination among all the stakeholders have to be ensured to ensure effective

implementation. iii. In case of SHGs taking up pisciculture activity in lease out tanks, line department have to

ensure timely guidance and on-hand training to the members. iv. In case of preferential allotment of GP tanks to SHGs, steps may be taken to avoid unrealistic

hike in lease rent.

b. Implementation of reservoir policy:

Production of 0.10lakh MT form 1.97lakh ha (138 nos) of reservoir is one of the lowest in the country. With an aim to change the earlier concept of capture fishery to culture based capture fishery, “State Reservoir Fisheries Policy” was promulgated for large water bodies (>40ha WSA). Under the policy, department stocked 138.56 lakh seeds in the 100 leased out small reservoirs. Effort also been initiated for preparation of macro and micro plan for development of reservoirs and training of personnel on management of reservoirs through a consultant. In effective utilization of these water bodies following points should be looked into. i) Infrastructure like approach road, captive nurseries, landing centers should be developed on a priority basis. ii) Fishermen cooperatives in the periphery of these large water bodies should be strengthened. iii) Involvement of local fishermen in fishing operation should be ensured.

iverine Fisheries: R

(i) Strict implementation of pollution control measures by industries to ensure optimal standards for pisciculture. (ii) Strict conservation regulations (iii) Maintenance of minimum water flow in rivers.

Brackish Water Fisheries:

a.Re-survey of suitable area:

The information on suitable area for brackish water farming in the State is related to a survey, which was carried out well before the restriction imposed on taking up in specified area on the coast. On the line of the Coastal Aquaculture Act, 2005, there is a need to re-survey the area suitable for brackish water culture.

b.Streamlining leasing policy:

In the state, major part of the suitable land is coming under the purview of Government. Revenue Department needs to simplify land-leasing policy for coastal land suitable for brackish water farming. The activity may be declared as an allied activity so that land conversion and water tax can be dispensed with.

c. Provision for basic infrastructure:

The S t of common facilities/infrastructures like road, power tate Govt. may promote the concepsupply, disease diagnostic center etc on a cluster basis. In this regard the possibility of utilising financial assistance under RIDF or participation of corporate bodies may also be explored

d. Development of model farm:

To ensure sustainable growth of the sector, there is a need to impart on-hand training to fish farmers in general and small farmers in particulars on scientific culture practices. In this regard establishment of model farm, may be in Public Private Participation (PPP), would be a wise proposition. e. Maintenance of sustainable natural production:

In order to enhance the production from the sector and to provide livelihood to lakhs of traditional fishermen, sustainable production from the natural sources needs to be ensured. It also carries significance in providing quality brooders. In this regard, Govt. has to ensure strict enforcement of the act in controlling natural seed collection, capture of broods etc.

f. Diversification of culture: Present brackish water culture is mostly confined to the culture of shrimp. In order to diversify the risk and to meet the demand, it is suggested to take up activities like crab fattening, sea bass culture , oyster culture etc. on a selective way. g. Streamlining policy of Registration: Permission from Aquaculture Authority of India (AAI) is mandatory for taking up brackish water farming. Even after 8 years of the promulgation of the act in this regard, less than 15% of the farms in the state have got the required permission. So there is a need for strict enforcement of the said act in the state. In order to ensure clearance of proposal on a time bound manner, there is a need for streamlining the process of sanction. Possibility of empowering State Level Committee for clearance of smaller units may also be explored. h. Provision for institutional credit: The bitter experience of the past has made bankers skeptical in sanctioning new cases. Considering various developments in the sector, bankers may come forward in financing units with clearance of AAI and adopting sustainable production technology. Ground level machinery of the line departments may also associate with bankers in recovery of due.

Marine Fisheries:

a.Infrastructure at landing centers: As cing value added products, infrastructure like the quality of the raw material counts a lot in produ

approach road, water and power supply, cold storage, auction hall etc. in fishing harbors/ landing centers and Jetties needs to be developed on a priority basis. In this regard, the State Govt. may explore the possibility of utilising facilities extended by GoI, NABARD etc. Private participation in construction, operation and maintenance of the fishery harbours and fish landing centers on BOOT concept may also be encouraged.

b.Utilisation of data:

On account of non availability of navigational aids on the crafts and limited reach, Potential Fishing Zone (PFZ) advisories provided by National Remote Sensing agency is not fully utilised for the benefit of coastal fishing communities. In this regard, line department in association with Indian National Centre for Ocean Information Services (INCOIS), ORSAC may initiate steps not only in establishing more and more Information Kiosks, Electronic Display Boards etc but also for effective utilization of information by traditional fishermen.

c.Restriction on introduction of new vessels:

In the State, as reported by the national review committee, fishing fleet in the size range of 8 to 15 meters OAL has attended the optimum strength. In this regard there should be a strict prohibition in introduction of new vessels of the said size. Specific vessels beyond 15 meter OAL may be added to the fleet to tap resources beyond 50-meter depth. In addition, emphasis may be accorded for motorisation of the existing boats

d.Spread of micro credit concept:

Even though the concept of empowering women through the concept of SHG has seen a movement in the entire state, the same is very limited in coastal districts. There is immediate need on the part of line departments not only to spread the message but also to assist them in taking up income generating activities. Nodal Departments like Mission Shakti may take initiative in imparting training to the line department personnel in this regard. e.Marketing of dry fish: Under STEP 3000 members of 32 Primary Fisher Women Cooperative Societies (PFWCS) were trained on production of value added products like dry fish and fish/prawn pickle. In the absence of proper information on marketing, they are unable to realise better price. In this regard line department may initiate steps for collection of information on various market players, scope for expansion in North-Eastern states, interaction between producers and traders etc. f. Effective implementation of Centrally Sponsored Schemes: As the fishermen are prone to various natural calamities, fishermen welfare schemes like Development of Model Fishermen Village, Group Accident Insurance for Active Fishermen, Saving-cum-relief scheme are in operation in the state. Timely contribution of share, active par ation of the line departmticip ent in timely utilization of the fund would be immense beneficial. In order to make the Janashree Bima Yojana a viable proposition, there should be wide coverage and increase in group size.

hanadi river system ere affected by heavy rainfall during the post monsoon season.The state had received excess n

the were opened due to which the crops in the down streams areas were washed way. The state had declared that as many as 23 districts were effected by the floods.Further,the

e claim may be submitted expeditiously after completion of the formalities

for the same.

Banks/RRBs on the basis of their eligibility and on

9. PRODUCTION CREDIT The potential under this sector for the State is estimated at Rs. 2520.67 crores. Issues: 1. Tackling of the Flood situation in the state

The state has been affected by yet another natural calamity during Kharif 2004. Most of the coastal districts and also districts on the situated in the river basin of the Mawrai fall in some districts. Due to the rise in the water level in the Mahanadi reservoir the gates of

Hirakud dam afollowing measures may be taken by banks to tackle the flood like situation.

The crop insuranc

Banks are requested to cover all their crop loan borrowers under KCC Scheme so that the problem of crop loans lime delay in credit, delay in inputs supply, etc., can be favorably addressed.

Banks may grant MT(Conversion)/MT(Rephasements/Reschedulement) loans to borrowers

whose standing crops are damaged. NABARD would consider providing conversion of ST(SAO) loans sanctioned to Cooperative completion of all formalities.

elf Help Groups under SHG-Bank Linkage Scheme. NABARD

provides cent percent refinance to banks.

To enable the members of the SGSY SHGs to take up income generating activities and increase their family income, the banks may consider sanctioning of Economic Assistance

RD provides 90 % of the loan amount disbursed to

R

oldings.With poor irrigation facilities in the

g basis and are mostly dependent on the money lenders to meet their credit requirements for carrying

rmation of Tenant Farmers

The out of 9 RRBs have reported to have formed TFGs .

3. N

make a concerted effort to increase the non credit input in agriculture for

because of the traditional agricultural practices of the cultivators and lack of

To enable the farmers to undertake farming activities, the banks may consider providing credit assistance to sound S

Loans to eligible SGSY groups. NABASGSY groups as refinance.

2. efinance to SF/MF and SC/ST farmers.

It is observed that the size of the average holding is decreasing over the years which is an area of major concern. Though there has been a growth in the release of crop loans to SF/MF and SC/ST farmers, still there is ample scope for increasing the credit flow as a majority of them still do not avail credit from institutional sources. Further, since there was incomplete coverage of SF/MF and SC/ST by the banks in view of the absence of ownership land holdings , the scheme of Tenant Farmers Groups/Oral Lessess was introduced by NABARD and it has become mandatory for banks to finance 2% of their total loans to these groups.The Orissa state is predominantly an agrarian economy with a high proportion of small and marginal land hstate , even the big farmers lease out a portion of their holdings to small farmers or make share cropping arrangement with them.However, nowadays it is observed that land less and farm laborers cultivate some small land holding either on oral lease or on a sharin

out their cultivation. Therefore there is ample scope for the foGroups (TFGs) in the state as illustrated below:

CCBs and RRBs have made a beginning in the formation of Tenant Farmers Groups (TFGs) and 7 out of 17 DCCBs and 2

eed for increasing the Production & productivity of farm land.

The productivity of various crops is very low when compared to the national average. The govt. shouldincreasing the productivity.

Lack of adequate irrigation facilities and recurrence of natural calamities like flood, cyclone

and drought have a negative bearing on the agricultural development of the State. In the absence of assured irrigation, cultivation in these vast stretches of farmland is dependent on rain water.

The major portion of the cultivable land in the state is monocropped.

Though potential for irrigation has been created, the same is not optimally utilised mainly

entrepreneurship.

Mechanised farming is yet to gather the required momentum.

Water logging, salinity, soil erosion due to shifting cultivation, excess acidity etc. are some of

s/fungicides should be encouraged.

The production and distribution of chemical fertilizers need to streamlined by encouraging

4. M

eting of various crops is negligible. Major portion of the

ue to inadequate storage

facilities/financial constraints at the PACS level and the limited role played by various

storage, etc., are to be provided particularly to the SF/MF to ensure remunerative prices for the produce during the entire season.

mpany viz, National Collateral Management Services Ltd, a company floated by NCDEX to procure rice from 4

rough share capital contribution, institutional credit, etc.

icient and vibrant marketing system for which the

e DLTC meeting is attended by officials of Line departments such s Deputy Director Agriculture,Plantation & Horticulture Deptt, LDM, DRCS, representative of

OSCB, some progressive farmers and the DDM/DDMs of the concerned districts.

the reasons for low productivity levels.

Further, adequate use of pesticides/herbicide Use of organic manure / bio-fertilisers on a large scale is to be encouraged.

participation of private sector also.

arketing support for Agricultural Produce.

Unremunerative prices for the crops is a major concern of the farming community. There is wide difference in the farm gate prices and market prices.

Institutional arrangement for markproduce is marketed through the unorganised channels. Exploitation by middle men and distress sale of produce are not uncommon.

These unorganised channels have developed mainly d

procurement agencies in the state.

Major thrust should be given for institutional arrangements for marketing to encourage an efficient marketing system. Necessary infrastructure facilities viz., transportation, post harvest technologies for

It has come to notice that the FCI has hired a private risk management co

districts in Orissa (Bolangir, Nuapada, Bhadrak and Balasore) at MSP and it is proposed to extend the operation for Rabi season also. This scheme could be extended to other districts also to help the SF/MF.

The financial position of nonviable societies is to be reviewed and their resources have to

augmented th The govt. should endeavor to establish a effcredit institutions can avail refinance facility through a separate line of credit opened by NABARD for marketing of agricultural produce. Recently NABARD has increased the loans for marketing of crops against pledge of agricultural produce to 75% of the value of the produce pledged subject to a ceiling of Rs. 5.00 lakh per borrower. More banks may avail of this facility

uring the year. d 5. Need for moderation in scales of finance

In the state of Orissa there are 17 DCCBs who are conveners of DLTC for fixation of Scale of finance in all the 30 districts.Tha

As regards fixation of SOF as a range,in most of the districts there is separate scale of finance for Traditional and HYV varieties of crops like Paddy, Maize, Sugarcane and vegetables.Further, in some districts there is separate scale of finance for irrigated and non irrigated crops like pulses viz arhar, biri mung and ragi.

s crops are to be fixed by the DLTCs well in advance before the m TCs. rs

entation of the NAIS. should be popularized and the coverage be broadened in

terms of both crops and area. For conducting the crop cutting experiments, Gram Panchayat may be taken as the defined

d by everyone.

7. P s of the weavers sector

o

mproved tools/equipments etc., so as to enable the weavers to

rlyproduction a

8. the redit C

The KC e is bein ented ooperative B , RRBs an ial b8-99 onwards. As at the end of September 2005, the number of cards

sued by the above banks are as under : (Rs. lakh)

The Scales of finance for variouco mencement of the cropping season. However, delay was observed in convening the DLFu ther, wide variations in the SoF fixed by DLTCs in the same agroclimatic zones have also been ob erved. The SCB should convene the meeting of the SLTC and moderate the SoF fixed by the DLTCs. 6. Stabilisation arrangements

As the state is effected by successive natural calamities, the ACSF should be augmented. The implem

area. It is observed that three different agencies assess the crop yield in the state. The state should

endeavor to ensure that only one set of data are compiled and the same are accepte

roblem

The primary societies are saddled with the problems of operating / accumulated losses, declining duction / sales, acpr cumulated stock and non-viability. These factors are analysed below :

The societies are unable to get adequate marketing support from OSHWCS. In case of several societies, the production and sales are declining year after year leading to reduction in credit limit. Non receipt of Rebate claims/ dues from MDA for years together resulting in increasing interest burden.

The State Government / Apex Society have to increase their efforts on design development, training, providing iundertake market oriented production.

The State Level Societies may undertake research and market studies to assess the customer preferences, provide designs/patterns to suit the customer taste and make the production customer oriented.

Staff of the DCCBs are not prope trained for supervising the societies engaged in ctivities.

Implementation of Kisan C ard.

C Schem g implem by the C anks d Commerc anks in Orissa from Rabi 199is

Cumulative cards issued Aggregate credit limit sanctioned Comercial Banks DCCBs RRBs Comercial Banks DCCBs RRBs

259918* 2395746 297543 NA 457544.27 53402.11

* Position as on 31.03.05 Outreach:

S to ring the above farmers under KCC fold. 09 out of 17 DCCBs and 02 out of 09 RRBs have formed

if and Rabi fixed by Cooperative Banks and RRBs and allowing opération on e limit within the sub-limits during a particular season is restricting the flexibility of KCC.

hinery, dugwell, pump set & allied activities is vailable from banks. But except Cuttack RRB, no other bank has reported to have advanced term

loans under KCC. PAIS : f Orissa, RRBs hav plementing the PAIS in a m per the details . However, DCCB t been showing keenness not-so-

rden.

The DCCBs/RRBs have made special drive to reach out to the farmers to cover them under CCC. Although KCC is more or less stabilised but defaulters, share croppers, tenant farmers and oral lessees are yet be fully covered under CCC. RRBs and coop. Banks have started forming TFGb756 TFGs as on November 2005. Usage : With the introduction of KCC, farmers are satisfied of getting crop loan in time . But the sub-limits for Kharth With the enlargement of scope of KCC to inc lude term loan, requirement of credit of farmers for purchase of plough, bullocks, agricultural maca

In the State o given under

e been ims have no

odest scale as due to their

strong financial position in sharing the bu

KCC issued as on 30.09.05 KCC - covered under PAIS RRBs 297543 115895

Coop. Bank 2395746 Not covered SUGGESTIONS FOR IMPROVEMENT

More publicity measures for educating the farmers would have to be taken up by the ban� ks.

rvesting so that the farmers would get remunerative price for their produce.

a unit for the coverage of crop insurance.

ost of cultivation and umption purposes.

arm sector as it has tradition of handicrafts, n

tv

r maintenance of industrial estates, uninterrupted power supply to various SSI and

ollect, preserve and update various project profiles in respect of different RNFS

� Currency of each drawal may be allowed to run for 12 months instead of raising demand immediately after the ha

� Gram Panchayat to be treated as � Agriculture Department should make arrangement /efforts to educate the farmers about the

latest agricultural practices through on location demonstration camps from time to time. The credit limit should be fixed realistically so as to cover the entire c�

cons 10. NON FARM SECTOR

Orissa has excellent potential for rural non fha dlooms. The potential under this sector is estimated at Rs.647.28 crores. Issues: Ac ion Points/ Points for discussion Go ernment departments/ other agencies

Regulaother RNFS units DIC may cactivities and make them available to the needy entrepreneurs.

The State Government may fill up vacant post of IPOs in various districts. g marketing of RNFS produces in the

tating tourism development through appropriate infrastructure and service support,

Developing post-harvest infrastructures like grading, packing and branding of various RNFS ted produces.

s

revived.

ster based lending. s/

f artisans/other needy borrowers under Swarojgar Credit Cards scheme/ Artisan Credit Card(ACC)/Laghu Udyog Cards(LUC).

o /SISI/NABARD may be made available to the prospective entrepreneurs.

licity of various schemes- For creating awareness among rural masses various schemes f leaflets/

Issues:

ORMAS may further intensify their efforts in promotinState.

Imparting quality training on Entrepreneurship Development with the help of professional institutes.

Setting up Common Facility Centres, Design Development centres for the traditional crafts. Importance to Cluster approach for development of Handicrafts/Handloom products. Encouraging private investment in RNFS by way of incentives. Revival of Apex Handloom and Handicraft agencies. Upgradation/capacity building of Handicrafts Training Centres.

Facilipromoting Orissa as a tourist destination.

Setting up of more agro based industries to absorb the unutilised manpower from agriculture sector.

rela Development of eco-tourism, eco-technology such as vermiculture, waste management

technology etc. by involving NGOs/ SHGs/ Local Bodies to create awareness may be taken up.

Setting up of export oriented units for various handicrafts and handloom item Due to lack of managerial ability and working capital, many powerlooms units in

cooperative sector have become sick and needs to be Banks

Banks may consider extending finance to trainees supported by NABARD under its promotional Programmes such as REDP, Skill Development Programme etc.

Banks with the help of NGO may form the SHGs of artisans of various crafts whereby fulfilling their credit needs through bank linkage preferably in cluster basis.

Banks have to play a proactive role in graduating SHGs into SMEs by providing adequate, timely and hassle free finance to the matured SHGs.

Working capital needs of RNFS units have to be fully met. Banks may follow clu

Banks may identify committed partner NGOs/ volunteer agencies/ registered societieclubs and utilise their services for RNFS development. Banks may cover more number o

M del projects available with various agencies such as DIC

Pubavailable with DIC/NABARD/SIDBI/Banks etc may be propagated in the form opamphlets/ media.

Low cost housing technology adopted by the borrowers may be encouraged by the banks � Banks have to come forward to conduct more number of EDPs in collaboration with

institutions like RUDSETI model. 11. RURAL INFRASTRUCTURE DEVELOPMENT FUND

Action points / Suggestions for smooth implementation of on-going RIDF projects I. The State Government may periodically convene High Power Committee (HPC) meetings and

ensure quality and timeliness in completion

volving Fund exclusively for Survey & Investigation hich helps in proper assessment of Project Estimates & preparation of Detailed Project Reports.

f preparation of projects, preparation of imbursement claims.

take detailed review of the implementation of projects. ii. The State Government may provide specialised training to all its officials associated with RIDF regarding project preparation, project appraisal, implementation, supervision/monitoring, evaluation etc. iii. The State Government may formulate better tendering procedures to weed out incompetent contractors from the impaneled list of contractors toof projects. iv. The State Government may create a Rewv. The State Government may computerise the system orevi. The State Government may augment the staff strength of quality control departments for better implementation of qualify control measures. vii. The State Government may make proper budget provision for all the projects at the commencement of the financial year itself. Suggested Strategy for sanctions RIDF during 2006-07 1. Since the State Government has been drawing substantial assistance under RIDF, it is preferable that it may take stock of potentials of all sectors that can be covered under RIDF in the

ars( as normally allowed under RIDF), the projects may be

ojects vis-a-vis medium irrigation

may implement intensive programmes through the help of NGOs y motivate and orient the farmers for the concept of

ent. ify roads/bridge projects as far as possible under the overall

state for exploitation over a period of 2-3 years and come out with a blueprint identifying specific activities and create a shelf of projects to be submitted under RIDF. 2. Instead of posing medium irrigation projects of high outlays which is not feasible to be achieved in the span of two to three yeposed in a truncated fashion. 3. Priority may be accorded to BKVY and Minor Irrigation prprojects which can be implemented generally at a lower cost per hectare. 4. The Participatory Management of irrigation structures under BKVY programme is yet to stabilise and State Governmentand institutions like WALMI to properlparticipatory irrigation managem5. The State Govt. may identconnectivity planned instead of posing in a scattered fashion. 6. Diversification State Government may accord priority for fisheries, animal husbandry,

, social sectors while identifying projects for diversification. Some of the

. Slaughter Complexes for ensuring supply of hygienic meat

watershed managementsectors are suggested below : I. Fish landing centres in potential areas. ii. Production of animal vaccine. iii. Flood protection measures. ivSynergy between RIDF and other developmental programmes. The RIDF projects are having a substantial impact on the infrastructural development in rural

and investment credit and extension activities. It areas which should have a multiplier effect on other developmental programmes particularly , credit dispensation in respect of both short-termcalls for the following steps by various agencies.

i) Increasing the extension support by the line departments of GoO to the areas which have been provided with better irrigational facilities, better connectivity so as to bring about higher production and productivity through propagating scientific and commercial agriculture. ii) Creation of Water User Associations by GOO in the feasible areas where irrigation is created to promote participatory irrigation management.

e banking sector to agriculture and

one block each of 5 selected districts viz, Malkangiri (K Guma), Nabrangpur osagumuda), Nayagarh (Daspalla), Kandhamal (Khajuripada) and Kalahandi (Th.Rampur)

ce and special block plans may be prepared by the r RIDF. V clubs and SHGs in feasible areas.

lity and spread of NGO are ritical factors.From bankers side , rating, appraisal , credit linkage , repeat lending and post nkage follow are to be done on scientific basis. SHGs which are self administered micro forums r proximity,trust,commitment and flexibility are to attempt democratic functioning, fund anagement and encourages income generating activities for quality upscaling of

nge should emanate from people’s willingness,desires and involvement and promoters should be successful in eliciting organized effort from poor in

idenof N

SH rces and their

�

iii) Providing adequate short-term and long-term credit by thallied activities in the above areas. Agro-processing units and non-farm activities may be encouraged by banks. A list of completed RIDF projects is already sent to SLBC / DCCs for taking into account increased need for credit in such areas. iv) Under the scheme of Pilot Project for Integrated Development being implemented by NABARD in(Kprojects identified should be given preferenState Government undev) Banks may launch VVvi)Diversification: State Government may accord priority for fisheries, animal husbandry, watershed management, social sectors while identifying projects for diversification. Some of the activities like Fish landing centres in potential areas, Production of animal vaccine, Flood protection measures and Slaughter Complexes for ensuring supply of hygienic meat may also be considered. 12. mICRO CREDIT INNOVATIONS

Issues for discussion :

Even though SHG-Bank model has emerged as a mainstream model for delivering micro finance services, all is not well.Only 60% of the groups, meet the NABARD standards that means that the promoting agencies including NGOs will have to ensure promotion and nurturing as per the method prescribed for which quality,size,resources,expertise,credibiclifomSBLP.Commitment to chaand NGOs increasing control over resources and regulatory institutions by making them aware and

tifying available resources in and around them.However, the human touch which is the hall GOs should not b be diluted while developing professionalism .

Specific issues in brief G level A great deal of local feeling and knowledge is required to assess the local resoupotential , different ways of exploiting them, the cost involved and after all the finance.This technical knowledge is not made available to SHGs.The government agencies should play a supportive role by providing the processed information for better decisions at the SHG end. On account of non-expansion of knowledge base , limited absorption of new skills and refinement of existing skills.Thus, the SHGs follow a set agenda thereby making it stereotype and monotonous.

High dependency on subsistence oriented Agriculture has not helped SHGs to come out of poverty trap. Even though there has been sectoral shift of output, the sectoral distribution of

rimary,secondary and tertiary sectors has remained stagnant.

anks operating in rural areas provide credit for productive purposes. Pure aves the field wide

s against the wish of the GOI, there lies a vast gap in promotion of mFIs in the country,In India , more than that of banks. Approximately, 700 of such

gro f :

networking, non-

s and social investors

hal break even and become sustainable. For which they will have to

household index

roducts and services by market research

del

n rations and managing risks

not help sustainability

workers across p MicroFinance movement may have made strides in poverty alleviation and women’s

empowerment, but it has not been able to free rural Orissa from the stranglehold of local shylocker i.e.money lenders.The traditional money lender lives and lives well. Typically, mFls including bconsumption loans are discouraged and most often not sanctioned. This leopen for the money lender to step in, especially in times of marriages or festivals or for household expenses, healthcare,emergencies and the like.

mFI level Promotion of mFIs Athe profitability of better performing mFIs is mFIs exists in the country and very few are operating in Oirssa. Most of the mFIs are unable to

w on account o

Week character(poor closeness,diluted commitment and less transparency Less capacity&competency(infrastructure,trained manpower and rapport,

adoption of business model) No skill in credit and financial intermediation No research and innovation

entry to commercial market Non-profitability character restricting

lenges before sustain ability of mFIs C However , the NGOs are to

act as under: Spreadsheet calculations to know how many clients would need to be served to break even

leading to know the cost of operations Recruit and train staff. Some heavy up front investment might be required

Minimizing leakage of funds for non-poor by using Group promotion by clients Development of demand driven p Manage risk portfolio around 5% expecting to loose half of this Keep operating cost ratio below 20% Develop a strategic business plan and financial mo

Co tributors to sustainability

Lowering costs ope Broader offerings in terms of products and services combined with higher asset qualities

helped mFIs push up the productivity frontier Cost cutting by decentralizing and standardizing MIS, simplifying appraisal with credit

scoring and basing compensation on performance Building equity to leverage more debt

Efficiency and staff productivity Improving MIS and portfolio tracking to ensure quality of portfolios

Mobilisation of money through grants has its limitations and does

Ch llenges to Institutional Financial Sustainability

Cost of providing micro Finance services are high and mFIs charging in the range of 20-24% can meet the costs Pull between least cost business model and full service business model- More the diversified products and a full range of services, more is the scope for competitive interest rate

a

d to have commercial minded boards, commercial orientation , address to the need lated structures while not loosing social

rove performance,

anagement and build appropriate information systems that

he need for coming closer

nd supply banks will

IS

rtise in professional knowledge have not been able to develop an MIS for ance portfolio

Ser

TheLoc re very much controlled on quality of services, investment , credit

ating is a key tool for transparency. an objective assessment of an MFI’s potential

Rat CRIL AND CRISIL have been helping funders and mFIs to gain an objective view of ent,acceptability and dissemination of standards

e to the needs of t linkage

at initial stages. ynamic view of the organization and shoud not be static. It should

Rat sider high returns instead of capital inadequacy

MFIs neeof the stakeholders , need to move into more reguaspects. The experience of SHARE microfin ltd has revealed the centrality of an appropriate legal form to the profitability, sustainability and growth of an mFI MFIs need to diversify its sources of livelihoods just like it wants its clients to and should offer fee based services in addition to fund based services Innovation in integrating with financial market is critical in India where the regulatory framework does not permit raising of public deposits. MFIs need to imptransparency, internal controls, mmeet both current and future needs.Most importantly if mFIs are to have a more commercial orientation, they need to move into regulated structures while not loosing on social aspects.

Bank Level Banks and mFI synergy - T

Commercial banks have high potential as a source of funds,especially in India where banks are fairly liquid. In India, mFIs have been able to leverage their equity at levels far higher than anywhere else in the world. However, going by the large gap demand ahave to show interest in wholesaling rather than retailing and therefore, the relationship between banks and mFIs has space both for cooperation and competition.

and Creditable database MBanks despite expe

monitoring the health of micro fin Issues in mainstreaming

Serving poor is still a taboo for bankers for various reasons ving poor is still identified with social banking and considered at par with state run interventions re exist so many disempowering practices while dealing with the poor al area banks adecisions,manpower planning and investment in infrastructure , technology etc including regulation on interest rates

Issues with Raters RRating helps funders to gainRating helps institutions to indentify,analyse risks and examines break even for sustainability

ers like Mtheir performance, supporting developmand promotion of information sharing.However , the raters must be sensitivthe MFIs who are engaged in poverty reduction as ratings may not allow any marke

Ratings should take a dconsider growth according to business plan

ings should con

Low ratings should not be the end of the road Issues with Government Focus on promotion government sponsored subsidized micro finance services rather than self

help ess emphasis on working with VAs/NGOs

Moderate stress on capacity building of Mission Shakti field level functionaries Less mobilization of extension services for building capacity of poors and entrepreneurs MicroInsurance -issues Designing product for minor but frequent ailments-lower cost and higher frequency from

self-insurance Higher cost and critical by formal insurance companies Middle of the spectrum by credit Thus MI should morph from savings to credit to institutional insurance

L