BANGALORE: The Karnataka Government's new agriculture policy and industrial policy are both directed towards boosting credit in rural areas, and National Bank for Agriculture and Rural Development (NABARD) has in its State Focus Paper for 2007-08, assessed a total exploitable credit potential of Rs. 20,907 crore against Rs. 17,803 crore for 2006-07.

At the NABARD seminar on the focus paper, Chief General Manager, Karnataka regional office, D.B. Gore noted that the major challenge before the State was implementation the recommendations of the Vaidyanathan Committee on Revival of Rural Cooperative Credit Institutions.

In October 2006, Karnataka was one of the 10 States to agree to implement the recommendations.

The State Government's views on the recommendations of the Task Force on Revival of Rural Cooperative Credit Structure too were awaited. The Government had constituted five sub-committees to suggest strategies and action plans for the implementation of the recommendations of the third interim report on the National Commission on Farmers.

Though the recommendations had been incorporated in the new agriculture policy of the State, their implementation had not been effective in addressing farmers' issues, Mr. Gore said.

The focus paper cites recent studies by the National Sample Survey Organisation, which reveal that the extent of financial exclusion (or those without access to institutional credit) in Karnataka is in the range of 25 per cent to 50 per cent.

These findings have led to the Central Government and the Reserve Bank of India initiating policy measures to improve financial inclusion. This will in turn increase the access to credit in the farm sector.The focus paper said the initiatives by RBI include permission to banks to use micro finance institutions, NGOs, SHGs as business facilitators to enable banks to increase outreach and ensure greater financial inclusion.

NABARD's initiatives include the NABARD-SDC Rural Innovation Fund to support unconventional, innovation experiments in farm, non-farm and micro-finance sectors which were started in October 2005, and a pilot project for setting up farmers' knowledge centres in 10 select schools in collaboration with the Azim Premji Foundation.

Devaki Muthukrishnan, Regional Director, Reserve Bank of India, in her keynote address, observed that agricultural productivity was closely linked to the net irrigated land (23.84 ha in Karnataka at the end of 2003-04).

"Higher credit flow to this sector would increase net irrigated land through better use of surface water, groundwater development, micro irrigation systems and rain water harvesting, she pointed out.

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