. 2016-17 Potential Linked Credit Plan 2016-17 Anantapur NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT ANDHRA PRADESH REGIONAL OFFICE, HYDERABAD Foreword The vision of Andhra Pradesh as a Sunrise State requires harnessing every bit of potential at the grassroot level through meticulous planning and putting in place a robust implementation mechanism. NABARD has been preparing the district level Potential Linked Credit Plans (PLPs) since 1989 to map the credit potential under existing as well as new activities to boost the rural economy. Over a period, and as mandated by RBI, the PLP has become precursor to the District Credit Plan. The PLP reflects availability of credit potential under different sectors of rural economy with disaggregated potential at block level. This PLP for 2016-17 has a theme of “Accelerating the pace of capital formation in Agriculture and Allied sector”. To achieve this, the share of term loans in agriculture sector needs to be in the range of 25% to 30% for sustaining growth of 4% in agriculture sector. The assessment of sector-wise potential has been made in tune with the revised Priority Sector guidelines of RBI. An attempt has been made to include exclusive chapters on Export Credit, Education Credit, Housing Sector, Renewable Energy, Social Infrastructure involving bank credit, Agriculture Infrastructure, etc. Further, due focus has been given to Area Based Scheme for the identified activities, Contingency Crop Planning, Farmer Producers’ Organizations (FPOs), etc. Besides, this document also covers availability of infrastructure and gap to be bridged, linkage support to be provided and other interventions required by the State Government for creating definitive impact to realize the potential available in the respective sector. The banks also need to come forward in harnessing the potential reflected in PLP document under various sectors so as to achieve double digit growth in SGDP. I hope that the effort will be useful to bankers in preparation of a road map for enhancing the flow of credit in the district and to the Government in identifying investment priorities, especially in the infrastructure sector. I would like to place on record my sincere thanks to the District Collector, Lead District Manager, Line Departments, RBI, Banks and other agencies for providing valuable inputs to our District Development Manager for bringing out this document. Harish Java Chief General Manager 15.09.2015 PLP 2016-17 Ananthapuram EXECUTIVE SUMMARY The geographical area of the district is 19130 sq. kms and it is divided into 5 revenue divisions viz., Ananthapuram, Dharmavaram, Penukonda, Kadiri and Kalyandurgam. The population of the district is 40.81 lakh, (2011 census). The decadal growth in population at 12.10 % is slightly higher than the State’s decadal growth of 11.10%. All the 63 mandals of the district comes under Southern plateau and hilly region of Rayalaseema and Karnataka (zone 10). The average annual rainfall of the district is 553 mm. The major soil types are Red soils and black soils. 75% of the rainfall is received through South West Monsoon and about 18% through North East Monsoon and the remaining received before and during summer season. Agriculture is the main stay of the economy of Ananthapuram district, with 85% of the farmers being small and marginal farmers. The main crops grown in the district are ground nut, redgram, jowar, rice, maize, castor, cotton and bengalgram. Total Gross Cropped Area and Net Sown Area is 11.06 lakh ha and 10.39 lakh ha respectively. The low cropping intensity at 106% is due to the fact that only 12.56% of the net sown area has irrigation facility and vast tracts of land are cultivated under rainfed conditions. Aberrant weather conditions particularly occurrence of long dry spells during crop growing season and drought like situation is a common phenomenon in the district. The overall performance of banks under District Credit Plan during 2014-15 was 68% of the target and the credit flow under priority sector was `.3225.41 crore as against the target of `.4811.53 crore. Credit flow under crop loans was `.1966.62 crore as against the target of `.3315.00 crore. The achievement under term loans has exceeded the DCP target but bulk of it constitutes the finance extended to SHGs for various farm sector investment activities. The flow of credit has been in the increasing trend for the last 3 years except for the year 2014- 15. The district has a network of 419 bank branches, 284 of Commercial Banks, 106 branches of Andhra Pragathi Grameena Bank, 28 branches of Ananthapuram District Central Cooperative (ADCC) Bank & one branch of APSFC. There are 98 Primary Agricultural Cooperative Societies. During 2014-15 deposits increased by 12.88% over the previous year where as the loan outstanding as on 31.03.2015 was increased by 8.29% as compared to the previous year and slight dip in the CD ratio from 97% to 93% but it is higher than the RBI stipulation of 60%. The theme for the PLP 2016-17 shall continue to be “Accelerating the pace of capital formation in agriculture and allied sector”. The productivity of farm lands either stagnated or reducing whereas the cost of cultivation has been on the rise, as a result, reduced gross returns and net incomes are realized by the farming community. The aforesaid situation is true across the farming situations including the farms having assured irrigation facilities. The rain fed farmers are more vulnerable to the climate change and weather aberrations. Although Farm research has provided certain solutions in the form of efficient farming systems involving components such as appropriate crops and varieties, dryland horticulture and livestock in suitable combination and proportion, putting them into practice by the farming community require handholding support by the multi-disciplinary teams deployed with Agriculture Technology Management Agency (ATMA) and also prompt financing by Banks for all the components of the integrated farming systems. Contingency planning especially in an arid rainfed area like Ananthapuram district is very vital in view of low and erratic rainfall, lack of irrigation facility which puts the farmers in distress and uncertainty. Integrated farming with diversified income source by encouraging allied activities, short duration crops like millets and pulses, use of improved farm implements, reducing cost of cultivation have been given due importance while preparing 1 PLP 2016-17 Ananthapuram the PLP keeping in view the above theme. The strategies and interventions adopted by various departments for achieving double digit growth under Primary sector mission were also taken into account while making potential projections. PLP Projections 2016-17 The total credit potential for 2016-17, under priority sector for Ananthapuram district is estimated at `.7942.64 crore registering a growth rate of about 12% and 46.8% over the PLP projections of 2015-16 and ACP targets of 2015-16, respectively. About 61% of the credit potential is estimated for agriculture and allied activities followed by MSME sector (16%), housing loans (9.2%) and renewable energy (8.7%). The crop loans have been projected at `.4049.36 crore, term investment for agriculture and allied activities (including agri-infra & ancillary activities) at `.828.93 crore (17% of the total agriculture loans), MSME `.1276.26 crore, housing loans `.729.00 crore and renewable energy `.690.00 crore. Potential Opportunities and Challenges in the district Major constraints are recurrent drought conditions, low crop diversification, increased fallow lands, low farm mechanization, inadequate capital formation, poor recovery under government sponsored programmes, shortage of godown space with estimated storage gap of 2.00 lakh MT, lack of adequate marketing infrastructure, etc.. There is a need for technology innovations in crop production & management – appropriate alternate crops and cropping patterns with/ without groundnut, contingency measures during dry spells, alternate land use systems, etc.. In view of the scanty rainfall, large number of water harvesting structures in the public waste lands and farm ponds in private cultivable lands are required to be executed to recharge the ground water and to improve soil moisture regimes so that drought proofing is possible. There is dire need for fitting all the irrigation borewells with micro irrigation devices. Govt. need to encourage organic farming practices so as to reduce the cost of cultivation of groundnut crop. Considering the land holding pattern and also the problem of fragmented holdings, banks need to promote JLGs and extend credit facility to tenant farmers/sharecroppers and marginal farmers. Ananthapuram is a potential district for Dry land Horticulture and Sericulture. Creation of scientific storage, supply chain management & market linkages Credit to dairy sector to be encouraged on a large scale with tie up arrangements with Milk Cooperative societies. Sheep rearing has to be promoted by financing the joint liability groups formed of the sheep breeders/ rearers. Post harvest credit facilitation by way of pledge finance against Negotiable Warehouse Receipts (NWRs) issued by WDRA accredited godowns. Exploitation of non conventional energy sources particularly solar power & wind energy that warrant pro active financing by banks in the district. Loans to MSME sector under CGTMSE and grant under technology upgradation scheme Formation of farmer producers’ organisations Area based schemes