papers for agri business

MICRO-FINANCE AND INDIAN AGRIBUSINESS INDUSTRIES
Dr, Pravinaben N. Pandya
Dr. Subhash Mahila, Arts, Commerce and Home Science College
P.G. Department (Economics)
JUNAGADH (362001)



Introduction:
The gains of technology up-gradation and competitive cost structure are not easy to come by. The lack of economics of scale due to the historical baggage of fragmentation of capacities in various industry segments, the high cumulative incidence of domestic of domestic indirect tax structure and the invisible burden of transaction costs due to infirmities of infra-structure and administration are imposing severe restrains on productivity gains. The issue is of great importance in the post – WTO scenario, global markets offer opportunities for all, but opportunities d not guarantees the desired results. Surely, there remains an urgency of strengthening the mechanism of finance. But the question is that how does one provide the financial as well as organizational effective management. The issue is more clear with the given below objectives of the paper.
( 1 ) The objectives:-
To find out -
1.1 Introduction of micro-finance.
1.2 Introduction of factoring and micro-finance.
1.3 Market segments of micro-finance.
1.4 Supply of micro-finance services.
1.5 Micro-finance institutional structure.
1.6 Classification of micro-finance institutions.
1.7 The problems of micro-finance institutions.

1.1 Introduction of micro-finance.:-
The term micro-finance refers to small savings credit and insurance services. It gives advantages to society and economy of country. The recent task force on micro-finance has defined it as provision of thrift, credit and other financial services and [products of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards. Micro-finance has been practiced for quite a number of states and regions in India by non-governmental organizations.

1.2 Introduction of factoring and micro-finance:-
Among the more recent development to support small but rapidly growing firms are basically in need of factoring and micro-finance. Factoring – affirm of receivables finance – can be an important credit tool for small and medium enterprises (SMEs)., which own few assets or collateral, but show rapidly expanding cells.
Factoring provides services which commercial bank usually do not offer, such as,
· Receivables management
· Credit insurance
· Collection services.
It has been able to fill a gap in existing financial systems. It promotes the diversification of industries and it improves capital efficiency.
The non-government organizations (NGOs) have financed small business activates. Instead of having to rely on family, friends, or village mo0ny lender, micro-finance given to instilling a culture of saving and investment. Because of its vast social implications micro-finance has often received public sector support. Both from domestic financial institutions as well as from abroad. Micro-finance works for quality of life for communities that had been at or below the poverty line and kindly gives the entrepreneurial spirit with in the people.

1.3 Market segments of micro-finance:-.

There are four important market segment of Demand for money.
First segment
Bottom level
(Credit for Income and asset)
Beneficiaries

Land less people who are engaged in Agricultural work on the seasonal work
Land less people

Manual labours
Manual labours in forestry, Minining, households industries, construction, transport… etc.
Second segment
Productive and additional asset
(Credit for working capital and term capital)
· Working capital for crop production in rural area.
· Term capital for acuuing additional and productive asset like:-
Irrigation, Machinery
Pump sets work-sheds
Bore wells non-farm works..
Equipments
Small and Marginal farmers,
rural artisans, Weavers,
urban self-employed:- hawkers, ,Vendors workers.
Third segment
Ö
Agribusiness Industries,
Commercial crops, Dairying,
Poultry, Fisheries,
Non-farm activities Processing,
Manufacturing,
Running provision stores,
Repairs workshops
Tea-shop
Service- Enterprise
The persons are not always poor,
but suffer from inadequate access to formal credit.
Fourth segment
Micro-credit for women.
Household work, Poultry, Cattle rearing, Spinning and Weaving, Tailoring, Manufacturing.
Part-time and full-time women worker




1.3.1 Introduction to Third segment:-
“Agribusiness Industries” means units which add to agricultural products / intermediates / residues, both food and non-food, by processing into products, which are marketable or usable or edible or by improving storability or by providing the link from farm to the market or part thereof. Agri industry also includes hi-tech and biotechnology based agriculture.
The third segment is of small and marginal farmers who have gone in for commercial crops such as, Surplus paddy, wheat, cotton, groundnut, Dairying, poultry, fishery. Among the non-farm activities, this segment includes those in villages and slums engaged in processing, manufacturing activities, running provision stores, repair workshop, tea shop, various service enterprise. These persons are not always poor, though they live barely above the poverty line and also suffer from inadequate access to formal credit.
1.3.2 Micro-finance demand for insurances services:-
Almost all groups of industries in their early years be with regular savings exceed tha loans given the front their funds. Of-course, parts of this lower demand of credit is the inadequate absorption capacity of their business. With comes from long years the position is changing demand for insurance services though not very well articulated but it is now substantial increase. Micro-finance customers have low income but they are try to develop with new capital base and so insurance for poorer is need for assets such as live-stock, pump-sets, shelter etc. their raw material is coming from agricultural crops and so crop insurance could be very useful for the industry. Micro-finance institutions are ready for the same in some cases.

The typical client base of any micro finance institution is poor people who do not have access to formal financial institutions.
Micro finance clients are typically self-employed, micro entrepreneurs.
In rural areas, they are usually small farmers and others who are engaged in small income-generating activities such as food processing and petty trade.
In urban areas, micro finance activities are more diverse and include shopkeepers, service providers, artisans, street vendors, etc. ?
Microfinance clients are poor and vulnerable non-poor who have a relatively stable source of income.
Many believe that 95% of the Microfinance clients are women

1.4 Supply of micro-finance services.
All India Debt and Investment Survey 1992, shows that the share of the non-institutional agencies, informational sectors in the out-standing cash dues to rural house holds. It was 36 % the dependence on rural house hold from their total out-standing dues. The micro-finance services are very near for cultivators and non-cultivators or agribusiness industrialist. In 1991, it was 33.7 % for cultivators and 44.7 % for non-cultivators. Among formal institutional sources and micro-finance institutions, the credit support almost 56 % and 44 %.

1.5 Micro-finance institutional structure
Capital formation in agriculture has declined, points out Dr Reddy, as a percentage of total gross domestic capital from 6.8 per cent in 1993-94 to 5.5 per cent in 1998-99. In particular, public investment has declined. The share of agriculture and allie d activities in the total Plan outlay has declined from 6.1 per cent in the Sixth Plan to 4.4 per cent in the Ninth Plan. Irrigation and flood control have received just 6.5 per cent over the recent Plan periods compared to 10 per cent in earlier Plans.
The different organizations in this field can be classified as :-
· Main stream – NABARD, SIDBI etc.
· Alternatives – SHG, NGOs.
While investment in agriculture is falling, the subsidy attributable to agriculture is going up. Budgetary subsidies for the farm sector have been increasing. Fertiliser subsidies, in particular, have gone up in absolute terms from Rs 4,390 crore in 1990 -91 to Rs 13,463 crore in 1999-2000. States' power sector subsidies have also recorded steady growth.
Dr Reddy argues that the RIDF should refocus, if possible, by diverting such funds directly for credit for agricultural operations. There is a dichotomy here. While banks are not able to reach their targets for lending to agriculture, the informal sector of lenders is quite active. A closer linkage between the banks and the informal sector will perhaps better serve the purpose of both banks and the informal sector.
This requires a change of mindset on the part of the RBI, which should look sympathetically at the non-bank financial sector lending to agriculture. Non-bank lenders have considerable advantages in terms of freedom from procedures, quickness of response and facilities for recovery. There is also the potential for using micro-finance. While a number of initiatives have been taken in this regard, it is important to ensure that micro-financial institutions do not get bureaucratised in response to excessive regulation.







1.5.1 Recommendations on Microfinance by RBI
1. RBI shall facilitate establishing micro finance funds for capacity building. Besides the subsidy funds of Swarnajayanti Gram Swarozgar Yojana (SGSY), funds shall be mobilized from Rural Infrastructure Development Fund, NABARD and also part of the profits of commercial banks.
2. A RUDSETI model institution could lubricate entrepreneurship at the village level reducing urban migration.
3. RBI should constitute a permanent working group on micro finance constituting members from formal financial institutions, Government, apex development banks, NGOs and MFIs to monitor and review the progress on allocation of resources and undertaking of capacity building initiatives.
4. Each bank could establish an exclusive micro finance cell to design strategies of the bank and creating an enabling environment to develop micro finance as core business of poverty lending.
5. As there is a need to familiarize formal financial institutions with non-subsidized lending to poor, RBI shall facilitate in building capacities of these institutions towards this objective through pilot projects of exclusive micro finance branches.
6. Policy initiatives and operational guidelines shall be initiated by RBI to promote branch based viable linkage by reaching and maintaining significant micro finanace portfolio-Rs. 2-3 crores supporting around 200 groups.
7. RBI shall facilitate setting up of business incubation fund through SGSY programme for providing venture capital support as there is a felt need for business support services for healthy growth of the sector. A separate national fund for Business Development Services could be thought of.
8. SHGs may be networked into community-based organizations at cluster/federation level.
9. Promotional costs of SHGs may be shared by MFIs/banks/Govts.
10. RIDF funds may also be used for SHG promotion.
11. Properly designed training courses may be put in place for MFI professionals
12. A National-level experience-sharing forum may be set up for interaction amongst institutions like RBI, NABARD & SIDBI.
13. An Innovation Fund for research & development may be initiated
14. MFIs may be encouraged and supported to go for campus recruitment from recognized management institutions to initiate professionalism in the sector.
15. Banks may reserve a certain percentage of resources – 15 to 20% - for capacity building of their officials. Deputation to well run mFIs should be thought to ensure cross learning.
16. Common performance standards based on key financial and non-financial indicators may be evolved.
17. Senior-level training programmes and exposure visits may be organized for Bankers for better appreciation of the micro finance sector.
18. Micro finance resource centers with exclusive focus on capacity building may be set up in five different regions
14 million poor families access micro finance through 881 154 SHGs linked to over 30 000 branches of 504 banks comprising commercial banks, regional rural banks and cooperative banks ( 90% SHGs are all women )Source : Presentation of Ms Ranjana Kumari - NABARD Chairperson at Micro credit summit in Dhaka on 16th February 2004
The micro finance sector in India has experienced a tremendous growth in the last decade due to the efforts of various agencies, including government, international donor agencies and development banks. There is now a reasonably good supply of loan funds in the micro finance sector; lately there have also been positive changes in the policies affecting the micro finance sector. Inspite of all these efforts, the outreach of micro finance services in India is still considerably small in comparison to the demand for such services.
The m-f market in India has not quite matured in terms of number of clients, range of services and variety of institutional models. Currently, it is estimated that only about 3% of the 75 million poor households in India who need access to credit, receive financial services from the formal financial institutions and the micro finance sector put together. The potential for the micro finance industry in India is still vast. Source : 2002 Annual Report of FWWB India
It is estimated that almost 260 mn. people are living in poverty in India. Under the internationally accepted poverty line of 1 USD a day, adjusted for the purchasing power, some 39 % of India's population would be considered as poor. The Govt. of India, since independence, has been making concerted efforts to provide financial services to the poor at affordable cost in its endeavor to solve the problems of poverty and unemployment. It laid special emphasis on expanding the network of banks all over the country in order to provide credit to the poor and weaker sections of the society. Besides, the Government also launched several subsidized wage and self-employment programmers for the benefit of the poor.
Despite all these efforts, there still exists a massive gap between the demand for credit by poor households and the supply of credit by formal financial and social institutions. Of the 75 mn. poor households in India, of which 60 mn. are rural households and 15 mn. urban households, it is estimated that the total annual requirement of credit for rural households would be at least Rs.120 bn. on the basis of Rs.2000/- per family. Another estimate for micro finance services, excluding housing, is Rs.500 bn. assuming that annual average credit usage is Rs.6000/- per rural poor household and Rs.9000/- per urban poor household. Housing credit requirement is estimated at Rs.10 bn. every year. In addition, the clients require saving and insurance services . The dependence of poor on informal and non-institutional sources of credit still remains very high.Source : SIDBI

1.5.2 Self-Help Group
SHG is a small, autonomous, non-political group of people living near to each other and share common concerns, work together for their personal, social and economic development.
Background of women Self Help Groups
Liberalisation of Indian economy has provided both economic opportunities and threats to the poor households. They too are gaining access to the expanding markets, be it a Block, where new industry is being set-up, or a small town which is attracting new tourists or a district headquarters which is getting its infrastructure facilities built, or simply because of increased purchasing power of the rural economy. Slowly but surely, poor households are responding to increased consumer demands. In many such cases of economic upsurge, availability of credit to the poor households provides the critical impetus for initiating and/or expanding their income generating activities(IGAs)
Experience in micro-finance programs suggests that access to financial services are critical for providing economic security to the pooor households. Credit, if appropriately delivered, is attractive to the poor (tlk of money!), financially viable ( income through viable IGAs) and self-sustainabale (capital and assets build up from income). Experience also proves that women in
poor households "Value" credit and ensuing benefits reach to the whole family. Experience across communities suggests that
Women by their nature have more fiscal discipline and take their repayment responsibilities seriously.
Through woman, the credit and the income reaches to the whole family.
Easy access to credit encourages women to initiate and expand her own exclusive IGAs.
She is able to improve her status in the family and the community, as she begins to access credit for herself and her family and by becoming significant contributor in managing the household cash-flow.
Her increased participation in the household and village economy helps her gain courage

1.6 Classification of micro-finance institutions:-
NGOs-Which are mainly engaged in promoting self help groups (SHGS) and their federations at a cluster level and linking SHGs with banks, under the NABARD schemes. NGOs directly landing to borrowers, who are either organized in SHGs or into Greenmeen Bank style groups and centers. These NGOs borrow bulk funds from RMK; FWWB and SIDBI. Also it borrow bulk funds from various donors.

STATUS OF RURAL WOMEN

Females are usually characterized as absorbed in law status and arduous work. Our findings also more or less runs on these lines, So many attempts has been made by researchers to examine the status & problems women in rural area. The civil conditions of females are favorable, early marriage very comment. Employed women are characterized by relatively large family size and low adoption of family – planning. Majority of them had never been to school. Work participation among the adult females is notable with about 68.7% and majority of them are agriculture labors. The condition of many women is very piteous being burdened with paid and unpaid work.
Modern legislation, especially since independence, has given women of most communities in India the rights to individually own, use and dispose of land and other immovable property, although the nature of
Those rights vary according to personal laws governing different religious communities and even regions. But a common feature of all the laws is that these rights are still not on an equal basis with men’s. Even more critical are the factors, which restrict women’s ability to exercise their limited legal claims and to control and independently farm the land where they do get access. ----
1.where patrilocality, village exigency and long distance marriages are the norm.

2.where women as sisters and daughters in traditionally par lineal groups do not voluntary give up
Their rights in favor of their brothers and instead file claims, male have been noted to resort to
Various methods of circumventing modern low. Single women (unmarried or widowed) are
Particularly to various farms of harassment by males.
3.official policies and programmers reflect and traditional prevailing biases tend to affect both court j augments and the formulation and implementation of government policies.
This systematic bias in the implementation of status of women is found even in the context of matrililineal society. Women have traditionally inherited property, but under the land prevention encouraged by the laws, the title deeds granted to individual households are typically in male names. This is the current issue for debate.

The women employment

The recent scheme of part time work for women of some state govt. provides a good example .The scheme realizes the recent increasing compulsion for women to seek employment due to economic necessity Women have to spend longer day outside home to work. The thrust of the scheme is this has been increased the social problems at home, the crucial problem being the care of younger children. There are no suitable and adequate facilities for children. The alternate to this situation is half-time employment for women. This would make it possible for women both to earn an income and also fulfill their responsibilities towards their children and family. Women may be free to choose between full-time and part-time employment depending upon their situation at home. The sexual division of labor and society remains intact even with women in the paid economy. Idiology adjusts to this by defining women as working mothers. And the two jobs get done for less than the price of one.

SOCIAL RESPONSIBILITY

Traditionally a firm used to get a component or product from its vender or supplier but did not take the responsibility to ensure at least minimum and humane standards that a supplier would offer to its work force . Corporates argued that they did not own their suppliers and hence had no right or responsibility to interfere in their workspace..Though there is a need for legislation and imposing certain regulations,experience has proved that if firms or units are
not convinced about an issue they will follow it in letter and not in spirit.Let us take the example of pollution control.If corporate do not assume respnsibility,the opportunities for education ,for employment will affected. Itcan bringe the disparity between rich and poor.We need to move away from this mindset and indstry and govt. together nee to find solutions that will meaningfully address the problems of the community.If govt. treats them as erring children who need to be chided and controlled then businesswill behave in a rebellious manner.But if both sides treats each other as mature adults then they dialogue and a commen ,actionable agenda will emmerge.

women and economic resources

women and economic resources
THOUGH WOMEN CONTRIBUTE substaintially to the economics of the family both by way of services rendered and wages earned , yet their potential is not duly recognised and very little attention is paid to involve them directly with developmental activities and enable them to become more effective and productive. In India,agriculture still provide 42% to 45% of gross domestic product and engages 68% of the working population. Of this latter figures again anything between 20 to 50 % depending upon the part of the country are working women, whose wages value of labour is either outright denied to women or squeezed out of reckoning or is fixed at much lower rates than for males even for equal or morenarduous physical labour like sowing or transplanting or hoeing. Some minimum education ts necessary for women to assimilate the of health care progammes, nutrition and diet , norms and values of scarce economic resources and adoption to simple technology to perform some of the routine agricltural tasks more effectively.
Posted by Dr. Pravina Pandya at 6:04 AM 0 comments
Tuesday, July 8, 2008

women and economic resources

THOUGH WOMEN CONTRIBUTE substaintially to the economics of the family both by way of services rendered and wages earned , yet their potential is not duly recognised and very little attention is paid to involve them directly with developmental activities and enable them to become more effective and productive. In India,agriculture still provide 42% to 45% of gross domestic product and engages 68% of the working population. Of this latter figures again anything between 20 to 50 % depending upon the part of the country are working women, whose wages value of labour is either outright denied to women or squeezed out of reckoning or is fixed at much lower rates than for males even for equal or morenarduous physical labour like sowing or transplanting or hoeing. Some minimum education ts necessary for women to assimilate the of health care progammes, nutrition and diet , norms and values of scarce economic resources and adoption to simple technology to perform some of the routine agricltural tasks more effectively.

WOMENSHAKTI AND AGRICULTURE [3}

Womenshakti and agriculture (3)
In the adoption of new inputs e.g. High yielding variety seeds, fertilizers and pesticides in the I.A.D. scheme were best adopters and non participants not covered by the scheme were most backward. the soil testing had not become popular with the farmers . The dry land farmers adopted new technology as long as project continued but in the subsequent year they tended to revert back to their traditional system. This had happened even in cases where technology had shown high pay off. There was appositive association between the extent of farmer’s social status and their level of adoption of innovations. Women constitute about half of the population& therefore there can not be happiness and full development, so long as women remain depressed and exploited. One of the major causes for the exploitation of the female is their eonomic dependence upon men. The preamble to U. N. charter reaffirms faith in fundamental human person in the equal rights of men and women. Though women contribute substaintaintially
to the economi of the family both by way of services rendered and wages earned , yet their potential is not duly recognized and very littee attention is paid to involve them directly with
developmental activities and enable them to become more effective and productive.
The women’s participation in farm activity is directly re to the economic status. Earlier the women were not even allowed beyond the household , today the rules related allowing the women to come on to the outside of the house.While the economically lower class women even work on hired agricultural labourers.Thus the degree and level of participation of women in farm is related to the economic class. The role of tribal women context of their traditional economy and examines The impect of rural development on tribal women. Activities such as huntng and gathering postoralism shifting and settled cultivation , craft and plantation labour are considered.

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