As per data provided by RBI, the credit flow to the food processing sector has been steadily increasing since the early 90s. The credit flow especially frog-leaped from Rs.9,872 in 2004 to Rs.24,025 in 2005 due to policy reforms and liberal financial assistance in the form of institutional credit and subsidy. Thus, the food processing sector registered a CAGR at 23.82% in nominal terms from early 1990s. By using GDP deflator, the real growth rate of the credit flow to the sector works out to 17.64% per annum. Likewise, the share of food processing sector in the gross bank credit has also been increasing steadily and stood at 5.10% in 2009.
In the light of Micro Small and Medium Enterprises Development Act, 2006, Reserve Bank allows banks to include direct finance to companies for agriculture and allied activities of upto Rs.10 million as Priority Sector Lending (PSL) exposure as against the earlier exposure of Rs.2 million. Direct Finance to agriculture include short, medium and long term loans given for agriculture and allied activities (dairy, fishery, piggery, poultry, bee-keeping et al) directly to individual farmers, Self-Help Groups (SHGs), Joint Liability Groups (JLGs) of individual farmers without limits and to others (such as corporates, partnership firms and institutions). Direct finance to small enterprises include all loans given to micro and small enterprises engaged in manufacture, production, processing or preservation of goods, et al.
Developmental Financial Institutions like NABARD, SIDBI et al and government agencies like CAPART, KVIC have schemes to support the groups and individuals for capacity building and setting up of food processing units. Series of capacity building and skill development training has been conducted for development of food processing activity. Even the bankers have been sensitised about the need for extending credit support to this sector and government departments for inclusion of this sector in their programmes.
It is imperative that the credit policy may be geared towards bringing about a vertically and horizontally integrated development of the food processing sector so as to strengthen the supply base of quality raw materials through (i) commercial and cost-effective production, (ii) contract farming Alongside attention may be focused on post harvest management and marketing et al like cold chain and direct marketing through infrastructure development.
In the light of Micro Small and Medium Enterprises Development Act, 2006, Reserve Bank allows banks to include direct finance to companies for agriculture and allied activities of upto Rs.10 million as Priority Sector Lending (PSL) exposure as against the earlier exposure of Rs.2 million. Direct Finance to agriculture include short, medium and long term loans given for agriculture and allied activities (dairy, fishery, piggery, poultry, bee-keeping et al) directly to individual farmers, Self-Help Groups (SHGs), Joint Liability Groups (JLGs) of individual farmers without limits and to others (such as corporates, partnership firms and institutions). Direct finance to small enterprises include all loans given to micro and small enterprises engaged in manufacture, production, processing or preservation of goods, et al.
Developmental Financial Institutions like NABARD, SIDBI et al and government agencies like CAPART, KVIC have schemes to support the groups and individuals for capacity building and setting up of food processing units. Series of capacity building and skill development training has been conducted for development of food processing activity. Even the bankers have been sensitised about the need for extending credit support to this sector and government departments for inclusion of this sector in their programmes.
It is imperative that the credit policy may be geared towards bringing about a vertically and horizontally integrated development of the food processing sector so as to strengthen the supply base of quality raw materials through (i) commercial and cost-effective production, (ii) contract farming Alongside attention may be focused on post harvest management and marketing et al like cold chain and direct marketing through infrastructure development.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
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Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
