India’s economy expanded 8.2 percent in the first quarter from a year earlier, the government said Wednesday, as rising farm incomes spurred consumer spending, adding pressure on the central bank to raise interest rates from a three-decade low.

The gain in the quarter that ended March 31 followed revised growth of 10.5 percent in the previous three months, the Central Statistical Organization said. Growth was 8.2 percent in the fiscal year through March, the most in 15 years.

Record crops fueled by abundant monsoon rains raised the incomes of the 700 million Indians who depend on farming for a living, spurring sales at companies. The yield on the benchmark bond maturing in 2017 is close to a 13-month high as accelerating inflation fuels speculation that the central bank may raise its key interest rate from 6 percent as early as October.

Courtesy: IHT, 1^st July '04
(Website : www.iht.com)

The Reserve Bank of India (RBI) on Thursday liberalised the non-performing asset classification norm for direct agriculture advances by aligning the repayment dates with harvesting of crops with effect from September 30, 2004.

According to the revised norms, a loan for short duration crops will be treated as NPA, if the installment of principal or interest thereon remains overdue for two crop seasons. For long duration crops, if the installment of principal or interest on loans remains overdue for one crop season, the loan will be treated as NPA, RBI said in a notification on Thursday.

As per the earlier norms, all direct agricultural advances become NPA, when interest and/or installment of principal remains unpaid after it has become due for two harvest seasons, not exceeding two half years (one year). The notification follows the RBI announcement in the Annual Policy statement for 2004-05 that in the case of long duration crops, the current prescription of not exceeding two half-years is inadequate and proposed the above change in the norm.

For the purpose of these norms, long duration crops would be crops with crop season longer than one year. Crops, which are not long duration crops, would be treated as short duration crops, RBI said and added that the crop season for each crop, which means the period up to harvesting of the crops raised, would be as determined by the state level bankers’ committee in each state.

Depending upon the duration of crops raised by an agriculturist, the above NPA norms would also be made applicable to agricultural term loans.

Courtesy: The Financial Express, 25^th June '04
(Website : www.financialexpress.com)

Ahead of the Budget, Prime Minister Manmohan Singh today said Government will create a single market for manufactured and agri-products, announce an energy policy package and pursue economic reforms to give "new deal" to rural India "I would like to see creation of a Single Market across the country for both manufactured and agricultural produce with encouragement of agro-industry linkages. With the introduction of Value-added taxation, this integration of the Indian market will be further enabled", Singh said in his first broadcast to the nation after becoming Prime Minister.

The UPA Government's Common Minimum Programme was committed to giving a "new deal" to rural India. Agriculture must receive the priority attention it deserves. Public and Private investment in agriculture has to be greatly increased, he said, adding there are still too many internal barriers to farm trade that must go.

Courtesy: Deepikaglobal, 24^th June '04
(Website : www.deepikaglobal.com)

The Indian Banks’ Association (IBA) has firmed up a special agricultural credit plan wherein public sector banks (PSBs) would try to bring into their fold at least 100 new farmers at each branch during the current year. With 33,000 rural branches and over 15,000 semi-urban branches, this effort alone would enlarge the universe of new farmers by around 50 lakh.

IBA’s action plan, which was discussed during the meeting of chiefs of PSBs convened jointly by it along with the National Bank for Agriculture and Rural Development (Nabard), envisages that each rural branch would take up at least one large agricultural project in the area of land rejuvenation, irrigation or micro-irrigation, sprinkler irrigation, watershed management, village ponds development, farm ponds promotion and dry land farming. In every district, banks would finance at least 10 agro-clinics during the current year.

According to IBA’s action plan, a special scheme would be worked out for the distressed category of farmers who have suffered production and income losses on account of successive recurrence of natural calamities, for the districts classified as such by the state governments. Furthermore, another special arrangement would be worked out to meet credit needs of farmers who had earlier defaulted in repayment of loans on account of genuine problems faced by them and their loan accounts were settled through compromise/write offs.

IBA has recalled the national agricultural policy targets of 4 per cent sustained growth in agri output. The 10th Plan estimates by Nabard have projected credit flow of Rs 7,36,570 crore for agri- and allied activities. Out of this, commercial banks are expected to lend Rs 3,81,652 crore.

Courtesy: The Financial Express, 23^rd June '04
(Website : www.financialexpress.com)

India on Friday announced a package of measures aimed at helping farmers in distress and promised to increase the flow of credit to the key farm sector by around 30 percent in the year to March 2005.

Finance Minister P. Chidambaram told a news conference the government plans to increase farm credit by lending institutions to about Rs 1.05 trillion from Rs 80000 crore a year earlier.

Chidambaram said the central bank and the National Bank for Agriculture and Rural Development (NABARD), will work out a plan to grant a one-time settlement for marginal farmers who have been declared defaulters and are not eligible for fresh credit.

"The scheme will enable such farmers to settle their accounts in a transparent manner and thereafter, access fresh credit," he said.

He said debt restructuring instead of writeoffs would be undertaken by commercial banks after the RBI and NABARD, a bank which specialises in farm loans, draw up a roadmap.

Indian regulations require banks to lend up to 18 percent of net loans to the farm sector, which employs nearly three-quarters of India's population.

Courtesy: Sify.com, 21^st June '04
(Website : www.sify.com)

Under the framework of Special Agricultural Credit Plan, Chidambaram said "commercial banks will make efforts to bring into their fold, on average, at least 100 new farmers at each rural and semi-urban branch during the current year."

"The goal is to enlarge the universe of new farmers borrowing from banks by about 50 lakhs," he said. Efforts should be made to enhance the coverage of institutional credit, including through Kisan Credit Cards which has so far been subscribed by 4.14 crore farmers, he said.

The 33,039 branches of commercial banks and another 14,051 branches of RRBs should be "energised" to enhance flow of farm credit, Chidambaram said.

"Each rural and semi-urban branch of banks will take up at least 2-3 investment projects in the area of plantation and horticulture, fisheries, organic farming, agro-processing, live stock, micro-irrigation, sprinkler irrigation, watershed management, village ponds development and other agriculture activities," he said, adding in every district, banks will finance 10 agro-clinics during this fiscal.

He said banks would be advised to lend more to small and marginal farmers as credit to this segment amounted to only 6.67 per cent as against the target of 10 per cent. In order to provide credit to tenant farmers and oral lessees, Chidamabaram said Nabard will facilitate formation and financing of SHGs during the fiscal.

"This exploratory or pilot project is expected to bring nearly a lakh of tenant farmers, oral lessees and share croppers within the banking fold," he said.

Courtesy: Economic Times, 18^th June '04
(Website : www.economictimes.com)

A package for agriculture, including measures to double credit to the farm sector in three years, is expected in the budget on July 8.

The Budget may also announce major investment plan for agriculture, rural infrastructure and technology induction in the farm sector. The budget is also likely to announce a comprehensive insurance schemes for crop and livestock and consolidation of agri schemes.

Strengthening of the public distribution system, lifting of restrictions on agri-marketing and freeing agricultural research from bureaucratic controls are the other focus areas in the Budget.

Courtesy: Financial Express, 17^th June '04
(Website : www.financialexpress.com)

With foodgrain exports accounting for nearly one-third of the Rs 20,000 crore agri-exports, the government will soon come out with a comprehensive foodgrain export policy. India exported nearly Rs 6000 crore worth of foodgrains in 2003-04.

Though Food Corporation of India held much beyond 23 lakh tonnes needed to maintain buffer stocks, the new Food and Agriculture Minister Sharad Pawar is averse to releasing foodgrains for exports to ensure the country's food security was in no way jeopardised.

Courtesy: Economic Times, 13^th June '04
(Website : www.economictimes.com)

Making a major move towards agricultural reforms, the Rajasthan government has decided to allow contract farming and setting up of 'mandis' in the private sector.

To pave way for contract farming and setting up of private marketing yards, the Rajasthan Agricultural Marketing Board Act would be suitably amended. Private contractors will have to get themselves registered with the government for contract farming.

The Agricultural Marketing Board, hitherto having exclusive rights of setting up marketing yards or mandis, will also be reconstituted.

Courtesy: Economic Times, 12^th June '04
(Website : www.economictimes.com)

Southwest monsoon has been progressing well after a lull of more than a week, with abundant rains helping timely sowing of winter crops in southern parts of the country. weather bureau and agriculture ministry officials said on Monday. The monsoon, after hitting the southern coast two weeks earlier than the normal starting date of June 1, brought good rains in Kerala and parts of Karnataka in the third week of May. But it halted its progress later due to lack of favourable climatic conditions.

The monsoon, which will reach Mumbai on June 9 or 10, engulfs the entire country by July 15. The country received an average of 161.6mm rains between March 1 and May 31, up 25% from normal. The annual rains are vital to the health of Asia 's third-largest economy, with the farm sector generating about a quarter of India 's gross domestic product and two-thirds of the country's population reliant on farms to make a living.

Courtesy: Economic Times, 7^th June '04
(Website : www.economictimes.com)