Nabard clears Rs 176 crore loan to nine states

National Bank for Agriculture and Rural development (Nabard) has kick-started the sanctioning exercise under the Rs 50,000-crore Agriculture Infrastructure and Credit Fund.

The bank has cleared sanctions aggregating Rs 176 crore to nine states for projects relating to minor irrigation, soil & water conservation, flood protection, agro-forestry, and cold storage. At the first sanctioning committee meeting of the Fund (also known as the Lok Nayak Jai Prakash Narayan Fund), held recently, sanctions were made to Karnataka, Kerala, Himachal Pradesh, Nagaland, Orissa, Tripura, Bihar, Uttaranchal, and Uttar Pradesh.

Nabard has made a projection of Rs 7,600 crore for 2004-05 for financing eligible priority sector infrastructure projects through the state governments.

The finance minister had announced the creation of this Fund in the vote on account on February, and it will be operational over the next three financial years.

The infrastructure component of the Fund, which is to be funded through the state governments, will be Rs 30,000 crore during the next three years, i.e. up to March 2007.

The activities proposed to be covered under the Fund include minor irrigation, micro/drip/ sprinkler irrigation, rainfed agriculture, integrated watershed development, reclamation of waterlogged areas, flood control and drainage, public sector cold storage facilities at exit points, 'apna mandi', rural 'haats' and other marketing facilities. The eligible borrowers under the infrastructure component of the Fund would be the state governments, state-owned undertakings and corporations, panchayati raj institutions, and other local bodies.

Nabard said it plans to mobilise the resources required for the Fund from banks and through market borrowings.

The allocation of resources so mobilised will go to finance infrastructure through state governments (Rs 30,000 crore); investment in agriculture and commercial infrastructure through banking system (Rs 18,000 crore); and development measures and risk management mechanisms (Rs 2,000 crore).

The objective of the Fund is to enhance the efficiency, productivity and profitability of the agriculture sector. This in turn will augment the incomes of rural households by strengthening infrastructure necessary for agriculture, encouraging diversification, value-addition and agri exports. Banks, having a shortfall in their agricultural lending portfolio, will contribute resources at terms similar to that of the Rural Infrastructure Development Fund.