PLP 2016-17 | Medak Executive Summary This document, the Potential linked credit plan (PLP) for the district, Medak, aims to transform rural economy of the district by assessing credit requirements of various sectors and to provide a road map to banks for extending credit to these sectors. The document is prepared through consultative credit planning with vision for infrastructure linkage to achieve accelerated growth and creating sustainable livelihood opportunities by ensuring food security, inclusive growth and effective credit dispensation. The theme for the PLP 2016-17 is “Accelerating the pace of capital formation in agriculture and allied sector”. The PLP has been redesigned with the objective of making it a meaningful link between development planning and credit planning process, leading to action planning. The plan which was prepared for five years, co-terminus with the XII Five Year Plan period i.e. from 2012-13 to 2016-17 and potentials had been worked out for each sector / sub sector that could be tapped with institutional credit during the XII year plan period, has suitably been modified taking into account current developments, especially revision in priority sector guidelines and policy initiatives of government. Also, keeping in view the national priority, the share of term loan for agriculture and allied activities is kept at 26%(`1032.44 crore) of the total potential (`3968.84 crore) under Agriculture sector estimated for the year 2016-17. The geographical area of the district is 9699 sq. kms and it is divided into 3 revenue divisions viz., Medak, Siddipet and Sangareddy. The population of the district as per census, 2011 is 30.33 lakh with 76% (23.05 lakh) people living in rural areas. The population is 3.63 lakh higher than the population of 2001 Census and constituted a decadal growth of 13.5%,which is above the decadal growth of 11.10% at state level. Agriculture is the main stay of the economy of the district, with 86% of the farmers being small and marginal. The average annual rainfall of the district is 869 mm and the major source of irrigation is tube wells and dug wells which account for 93% of the total irrigated area followed by and tanks (5.14%). The Gross Cropped area is 5.32 lakh ha with 37.9% area under irrigation. Onset of monsoon, its spread and quantum decide the fate of agriculture in the district and dependence on ground water for irrigation is another important feature of the district. The priority sector credit performance of banks under District Credit Plan during 2014-15 was 78%of the target and credit flow under crop loans was `1840.66 crore as against the target of ` 1757.70 crore registering a 105% growth and the achievement (`149.89 crore)under term loan is only 39% of DCP target(`388.80) clearly indicating that the investment activities require much more support in the district. The district has a network of 223 branches of Commercial Banks, 95 branches of A.P. Grameena Vikas Bank, 24 branches of Medak District Central Cooperative Bank, two branches of APSFC and 105 Primary Agricultural Cooperative Societies. The total deposits and loans outstanding of all the banks in the district were `8649.07 crore and `10846.94crore respectively as on 31.3.2015 with a CD ratio of 156. PLP Projections 2016-17 The total credit potential for 2016-17, underpriority sector for Medak district is estimated at `618070.58lakh registering a growth of 16.15% over 2015-16 PLP projections and 20.95% over the ACP target for the year 2015-16. About 64.21% of the credit potential is estimated for agriculture and allied activities followed by Other Priority Sector (20.04%) and MSME sector (15.74%).The crop loans have been projected at `2936.40 crore, term investment for Agriculture and Allied Activitiesincluding agri infrastructure and ancillary activities at ` 1032.44 crore (26% of total projections under 1 PLP 2016-17 | Medak agriculture and allied activities), MSME at ` 973.10 crore and other priority sectors, which include Housing, Education, Export credit, Social infrastructureand renewable energy and other micro loans to SHG/JLGs, PMJDY overdrafts etc.at ` 1238.75 crore. However there is a need to address some of the major constraints in Agriculture financing urgently with suggested action points as under: • Major constraints in the district are low crop diversification, indiscriminate use of fertilizers & pesticides, low farm mechanization, inadequate capital formation, poor recovery ofloans under Govt. sponsored programmes, non-availability of scientific storage space (estimated storage gap of 4.88 lakh MT) & other marketing infrastructure etc. • Shrinking ground water availability makes agriculture risky as major source of irrigation is bore wells/dug wells. • Lack of efficient marketing facilities and infrastructure to handle milk, vegetables and other agri/horticultural produce also hampers farm viability and calls for measures like post-harvest credit facilitation by way of pledge finance against Negotiable Warehouse Receipts (NWRs),scientific storage and marketing facilities near to the farm gate, supply chain management & market linkages. • Formation of farm producer organisations (FPOs) for Pulses, vegetables, dairy, fisheries will facilitate greater bargaining power of farmers in production, processing and marketing • Considering the land holding pattern and also the problem of fragmented holdings, banks may have to promote JLGs and extend credit facility to tenant farmers/sharecroppers and marginal farmers. • Govt. may encourage nutrient soil management practices so as to reduce the excess use of fertilizers and pesticides by farmers. • In view of depletion of groundwater, there is an imminent need to recharge the ground water through watershed approach, promoting farm ponds/water harvesting structures, bring in proper legislation and usage of water saving devices. • Dairy loans needs to be encouraged on a large scale in an integrated manner along with tie up arrangements with Milk Cooperative societies and creation of milk marketing and handling infrastructure under Area based schemes. • Credit flow for sheep farming needs to be supported by a collective recovery effort by banks together with development agencies • Use on non-conventional energy sources particularly for solar power & financing by banks for solar home lighting and water pumping systems are essential and imminent. • Loans to MSME sector under CGTMSE and grant under technology upgradation scheme will provide additional income to the rural populace. • Promotion of income generation and micro enterprises among SHGs is important to wean away groups from borrowing only for consumption purposes. Area based schemes Considering large number of small and marginal farmers and people below the poverty line, as also the expanse of agriculture and rural development, there is a need for promoting single purpose small scheme on cluster basis and aggregating them into area development scheme. Area development schemes on Dairy, Vegetable cultivation on Pandal system, Poultry are being implemented in the 2 PLP 2016-17 | Medak district in consultation with line departments & Banks. These schemes need tobe encouraged by banks in identified clusters.The same would also facilitate planning and execution of infrastructure facilities viz., backward and forward linkages for full realization of the benefits of the scheme. Highlights of developments / initiatives having bearing on the credit flow Investments in Agriculture and allied sectors enable capital formation in Agriculture in the district facilitating increased credit flow.NABARD has taken up many developmental initiatives viz., 25 watershed development programmes under distress district package, 07 IGWDP watershed projects & 2 TDF projects and banks are expected to meet the credit needs in treated areas. Other initiatives include promotion of JLGs, accreditation & registration of warehouses and technology interventions, etc. NABARD has also taken initiative ofdeveloping PACS as a ‘one stop shop’ for meeting all the needs of the farmers. NABARD has sanctioned grant assistance toICRISAT and NGOs for promotion of 10 FPOs in the district. Thrust Areas Thrust areas for 2016-17 include financing of post-harvest marketing infrastructure and JLGs/SHGs, NWR financing, implementation of area based schemes for dairy and vegetables,mini processing units, Producer Organizations, other Area Based Schemes. Infrastructure - Government & Private investments Infrastructure development is a necessary pre-condition for integrated rural development in the district. Rural Infrastructure Development Fund (RIDF) serves as a supplement to the efforts being made by State Governments in this direction.Total of 1001 projects have been completed. Potential creation under Micro Irrigation and under LIS/ Minor Irrigation & Medium Irrigation Projects, LIS/MI was 52971 ha and 9554 ha, respectively. Nearly 70% of the RIDF projects were implemented towards development of irrigation, roads, CLDP works, etc. Private investments are very much required for construction of Rural Godowns, cold storages & seed processing units and other post-harvest infrastructure. These will be capable of creating wide and big impact leading to increased production and productivity, better price realization by farmers, thereby, higher credit off take. Conclusion There is a need for a coordinated approach for enhancing capital formation, strengthening of SAMIS reporting system, better monitoring and review at JMLBC, DCC meetings, effective implementation