Role of Nabard in Agricultural Finance

Abstract

Progress of any nation depends on the Co-Ordinated development of its two sectors 1. Industrial Sector 2. Agricultural Sector. Different Economists have different views about the independence of these two sectors, but the two sectors are complimentary and interdependent and not alternatives. In the words of Ugeenstalle-"Without an increase in agricultural productivity industrialization is not possible and in absence of industrialization agricultural development is a false truth". Agriculture in Indian economy plays an important role both as a producer and as a consumer. More than 55% of country's population depends on agriculture, a sector producing 22% of G.D.P. the share of Agriculture in gross capital formation is 1.3% in 2002-03. The prosperity of industrial sector depends upon prosperity of agriculture as it provides raw material and market to industrial goods. The development of transport system is highly influenced by the growth of agriculture. With liberalization and globalization of Indian Economy, rationale of agriculture in foreign trade has increased. In 2002-03 it accounts for 38% of total exports which help the country to pay for increased market for industrial goods. Rural poverty can be reduced by development of agriculture as it generates both income and employment which creates more demand for industrial goods.

The capital output ratio is not very high in agriculture and it also depends on monsoon, so there is high risk inherent in traditional farming as a result of this rate of investment is very low in Indian agriculture.