The Objectives of NABARD: A Key Driver of Agricultural Finance and Rural Development in India
NABARD (National Bank for Agriculture and Rural Development) plays a crucial role in the Indian economy, particularly in ensuring the liberalization and efficient functioning of the agricultural sector. Established in 1982, NABARD's objectives have evolved to meet the changing needs of the rural financial and economic landscape. This article explores the primary goals of NABARD and how it contributes to the development of agricultural finance and rural areas.
Introduction to NABARD
With the increasing complexity of financial institutions and the role of the Reserve Bank of India (RBI) in regulating the entire financial system, it became evident that a specialized institution was needed to focus exclusively on agricultural finance and rural development. This led to the establishment of NABARD. The Agricultural Review Committee for Institutional Credit for Agriculture and Rural Development (CRAFICARD) was formed in 1981 to review the necessity of such a specialized institution. CRAFICARD's recommendations were approved, leading to the creation of NABARD on July 12, 1982.
Capital Source and Contributions
NABARD has a robust capital structure to support its objectives. The bank inherited the capital base from existing organizations like the Agricultural Credit Department, Rural Planning Credit Cell of RBI, and the Agricultural Refinance and Development Corporation. NABARD has an authorized capital of Rs. 500 crore, which has grown to Rs. 5000 crore as of March 2015. The Central Government has contributed 4980 crore, while RBI has contributed 20 crore. Additionally, NABARD has received a loan of Rs. 1200 crore from RBI. The bank has also taken over various loans granted by RBI to State Governments and State Cooperative banks for agricultural purposes, ensuring a comprehensive and robust financial support system.
Objectives of NABARD
NABARD's primary objectives are designed to foster the agricultural and rural sectors in India. These objectives align with the broader goals of poverty reduction, income generation, and sustainable development. Here are the key objectives of NABARD:
1. Refinance Assistance and Rural Development
NABARD provides refinance assistance to facilitate the growth of credit to various stakeholders in the agricultural sector. It supports both small and medium-scale industries, thereby promoting rural development activities. The bank offers financial assistance and guidance to help these industries expand and become more competitive in the market. This objective aims to improve the overall economic condition of rural areas.
2. Coordination with State Governments
NABARD collaborates closely with the State Governments to implement agricultural activities effectively. This coordination ensures that the resources and benefits of agricultural and rural development reach the intended beneficiaries. By aligning its activities with state-level strategies and programs, NABARD contributes to the successful implementation of agricultural projects and policies.
3. Improvement of Irrigation Systems
The enhancement of irrigation facilities is a critical objective of NABARD, especially in the promotion of agricultural activities. By promoting small and minor irrigation projects, NABARD aims to increase water availability for agriculture. This not only improves crop productivity but also ensures the sustainability of rural livelihoods. These efforts contribute to the overall agricultural output and help mitigate the risks associated with drought and irregular rainfall.
4. Research and Development
NABARD undertakes research and development (RD) in agriculture and related rural industries. This objective focuses on developing innovative solutions and technologies to address the challenges faced by the agricultural sector. By conducting RD, NABARD helps in the adaptation of modern practices and technologies, which can improve the efficiency and productivity of agricultural operations.
5. Promotion of Various Agricultural Organizations
NABARD plays a vital role in promoting various organizations involved in agricultural production. It contributes to the capital of these organizations, enabling them to expand their activities and provide better services to farmers. This support helps in strengthening the infrastructure and capacity of agricultural organizations, ultimately leading to improved agricultural practices and greater economic benefits for rural communities.
Conclusion
NABARD's objectives are designed to ensure the growth and development of the agricultural and rural sectors in India. From providing refinance assistance and enhancing irrigation systems to promoting RD and supporting various agricultural organizations, NABARD plays a pivotal role in achieving sustainable economic development. As the apex institution for agricultural finance, NABARD continues to evolve and adapt to meet the changing needs of the rural landscape in India.