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About NABARD I Role and Functions I Subsidiaries I Associates I CIRCULARS I Model Bankable Projects

Credit Functions | Developmental and Promotional Functions | Supervisory Functions

Minor Irrigation Model Bankable Projects

Land Development
Agricultural Engineering
Plantation / Horticulture
Agricultural Engineering Credit
Forestry / WasteLand This is a
Fisheries Increase in agricultural production and value addition to the agricultural produce are refinance facility,
two important factors to usher in rural prosperity. While agricultural mechanization it is intended for
Animal Husbandry Investment in
improves production and productivity; post-harvest processing, either primary or final,
adds value to the produce. Agricultural mechanization helps in increasing production, agriculture and
Medicinal & Aromatic
productivity and profitability in agriculture by achieving timeliness in farm operations, allied activities
bringing precision in metering and placement of inputs, reducing available input
Biotechnology losses, increasing utilization efficiency of costly inputs (seed, chemical, fertilizer, Technical
irrigation, water etc.), reducing unit cost of produce, enhancing profitability and Services
State Specific Projects competitiveness in the cost of operation. Agro processing helps in the conservation of Department
the produce and byproducts from qualitative and quantitative damages; enables value This division is
Organic Farming the service
addition to bring additional income and employment generation to the farmers through
the farm produce. However, these inputs of farm machinery and primary processing provider on
are very capital intensive and majority of our farmers do not get the desired technical issues
advantages in view of the shortage of capital with them to acquire these assets.
Therefore, an arrangement to provide custom hiring service facility for these farm and
primary processing machinery to the farmers by engaging unemployed agricultural
graduates will go a long way in meeting the requirements.

Agro Service Centres were tried earlier but many of those units failed in view of the
absence of a regular source of income. Such units, which have a primary processing
unit attached to it will have a regular source of income. These units will also have a
better scope for manpower utilization round the year and better productivity/ income
generation per unit of manpower deployed. This will give the added incentive to the
agricultural graduates to not leave the unit even if other job opportunities are

Importance of farm mechanization and agro- processing

The efficiency of mechanization can be judged from the fact that modern plough is
about 200 to 300 % efficient than indigenous plough, efficient machinery helps in
increasing productivity by about 30% besides, enabling the farmers to raise a second
crop or multi crop thereby making Indian agriculture an attractive proposition. It has
also transformed the way of life in rural areas into a commercial one instead of being
of a subsistence type. There is a need to double the food production by 2020. This
will call for raising more crops in a year thus limiting the turn around time. Increased
production will require more use of agricultural inputs and protection of crops from
biotic and abiotic stresses. This will call for greater engineering inputs which will
require development and introduction of high capacity, precision, reliable and energy
efficient equipment.

Earlier, it was considered that mechanization creates unemployment. The myth has
been broken and it has been observed that, agricultural mechanization besides
increasing production and productivity, also generates income and employment
opportunities. Several studies conducted in different parts of India have shown that
mechanization has helped in increasing production, productivity, generation of income
and employment. Punjab, a highly mechanized state, employs 7.0 lakh laborers from
adjoining states, out of which 3.5 lakhs are employed on a regular basis and
remaining during the main cropping season.
Total farm power availability has increased from 0.25 kW/ha in 1951 with animate
power contributing 97.4 per cent to 1.15 kW/ha in 1997 with animate sources
contributing only 22.7 per cent, mechanical sources 43.5 per cent and electrical
sources 33.8 per cent. The availability of draft animals is reducing, thus shortfalls
have to be met mostly through electro-mechanical power sources. The number of
land holdings is increasing and holding size has declined from 2.30 ha in 1970-71 to
1.57 ha in 1990-91. Small (1 to 2 ha) and marginal (below 1 ha) farms numbering 78
per cent of the total number of holdings, cultivate only 32.1 per cent of the area;
whereas 20.4 per cent medium farms (2 to10 ha) account for 50.4 per cent of the
cultivated area and 1.7 per cent large farms (above 10 ha) account for 17.5 per cent
of the cultivated area. However, it is heartening to note that average emerging land
holdings are large enough for mechanized farming as evidenced in Punjab and

As discussed in the earlier paragraphs, one of the major constraints of increasing

agricultural production and productivity is the inadequacy of farm power and
machinery with the farmers. The average farm power availability needs to be
increased from the current 1.15 kW/ha to at least 2 kW/ha to assure timeliness and
quality in field operations, undertake heavy field operations like sub soiling, chiseling,
deep ploughing and summer ploughing. Due to reduction in the size of the holdings, it
is difficult for the farmers to hold the machinery on their own. As a result, the benefits
of mechanization have been enjoyed by only a section of the farmers who have large
farm holdings. This problem can be solved by establishing agro service centres as
they will be able to provide the machinery on custom hire basis to these small and
medium farmers as and when it is needed. Increasing production and productivity will
not be the only answer for the upliftment of the farming community. Many other
supports like storage, processing and marketing arrangements at remunerative prices
are required to enhance the economic standards of the community. Provision of a
primary processing centre for the produce like rice, wheat, oil seeds, pulses etc. to
make products like flakes, flour, dal, edible oil etc., will be an instant source of value
addition for those farmers. This will provide the agro clinics a regular source of
income. Also a large number of farmers suffer due to lack of service and repair &
maintenance facilities for their machinery. There is a need to have such facilities in
the agriclinics to bring the services nearer to the farmers. Thus agro service centre
with farm machinery and primary processing provision will be a better solution
provider to the farmers besides creating self employment opportunities for the
agricultural graduates and unemployed youths.

Agriclinics on Farm Machinery & Primary Processing

The importance of Agriclinics on Farm Machinery and Primary Processing has been
recognized and GoI has given emphasis to make it a success. The scheme aims at
supporting 5000 ventures annually for individuals or on joint group basis.

The broad guidelines for bankers and entrepreneurs is given at Annexure I.

It is visualized that an agriclinic set up by an agricultural graduate with facilities to

provide service to the farmers in their production, post harvest primary processing
operations and attending to repair and maintenance works of their machinery and
equipment will form the back bone of the farming community to commercialize their

Investment Components

The present model scheme includes almost all the basic equipment necessary for
crop production, right from tillage upto bringing the produce to farmer's house/ market
place. This will also have a facility to process one or more number of the major
agricultural produce grown in the village/ area to add value for the farmers. There will
also be a provision of repair and maintenance of household goods and agricultural
equipment being used in the area. The investment component detailed below gives a
general requirement of an agro service centre. However, depending upon the agro
climatic conditions and demand of individual centres, necessary changes can be

1. Tractor, trailer and implements

In the present model, a 35 hp tractor is considered as it is suited to most of the soils in

our country and is sufficient enough for carrying out maximum of the works. Tractor
HP can be changed if any special operation is envisaged. Tractors perform a large
number of operations, both mobile as well as stationary. Therefore, along with tractor,
provisions of mould board plough, trailer, cultivator, cage wheel, disc harrow, seed drill
and other accessories are made.

2. Power Tiller/ Small Tractor

Power tiller is suitable for the paddy cultivation as well as for tilling small fields
specially under wet land conditions. Many of the works what a farmer cannot perform
with the help of bullocks and tractors in growing paddy; power tiller can; thus it brings
in a new hope to paddy growing farmers. In the present model, a power tiller is
considered, which besides performing tillage and puddling operations can perform a
variety of other stationary and mobile farm operations. However, when puddling is not
important and small distance haulage of smaller quantities dominate the custom hire
requirements a smaller tractor of 9-18 HP can be incorporated instead of a power
tiller. Necessary changes in the outlay can be incorporated accordingly.

3. Pumpset with accessories

Large number of farmers suffer due to lack of water during the critical periods of plant
growth, although water source is available. Availability of a portable pump set with the
agriclinic will be a boon to such farmers to meet the critical needs.

4. Power thresher

Quickest collection of clean grains after harvesting is a felt need of all the farmers to
avoid post harvest losses. A multipurpose power thresher matching to the HP of the
prime mover is envisaged under the scheme.

5. Winnower

Winnowing is the operation to separate grains from straw and chaff. A power driven
winnower is considered under the present scheme.

6. Self Propelled Reaper

Self Propelled Reaper is a machine equipped with a prime mover and is used for
harvesting field crops like paddy, wheat, soyabean etc. Under the model, a self
propelled reaper is considered.

7. Sprayers

Sprayers are used to spray insecticides and pesticides on the crops for plant
protection. Under the scheme, two manually operated and one power operated
sprayers are considered.

8. Tools for repairing of machines

Various tools are necessary for repair and maintenance in the case of failure of any
machinery. Accordingly, a provision is made under this head to have a complete set of
tools to meet the day-to-day repair works.

9. Primary Processing Unit

A primary processing facility to process any or more of the farm produce like rice,
wheat, pulses, oil seeds etc.; will enhance income generation capacity of the
agriclinic, while enhancing the productivity of the work force. The activity can be
selected depending upon the produce available in the locality. A financial provision of
Rs 0.50 lakh will be adequate to meet the requirement.

10. Workshop Shed

Provision of a workshop shed has been made to keep the machinery, tools etc. and to
carryout day-to-day repair and maintenance works. A shed area of 300 sq. ft is
considered adequate to meet the requirement

11. Insurance

As the agricultural machinery are capital intensive in nature, an insurance provision is

made against theft, accident etc.

On the basis of the current market prices, the investment cost has been worked out
as Rs. 6.82 lakh as detailed at Annexure II. Financial Viability: The financial viability
has been worked out based on certain assumptions given at Annexure III. The
income and expenditure components are given at Annexure IV. Calculation of NPV,
IRR and BCR have been depicted in Annexure V (a), whereas the repayment
schedule has been shown in Annexure V (b). The salient features of the economics of
the agri clinic are as follows: Net Present Worth @ 15 % discounting factor = Rs.
1,80,942.97 ; Benefit Cost Ratio = 1.09 : 1 ; Internal Rate Return = 24%. Average
Debt Service Coverage Ratio = 1.72:1



1. Objectives

1. To supplement the efforts of government extension system

2. To make available supplementary sources of input supply and services to
needy farmers
3. To provide gainful employment to agriculture graduates in new emerging
areas in agricultural sector.

2. Concept / Definition :-

Agroservice Centres are envisaged to provide input supply, farm equipment on hire
and other services. In order to enhance viability of the ventures, Agriculture
Graduates may also take up commercial activity in agriculture and allied areas along
with the Agroservice Centres.

3. Eligibility :-

The scheme is open to Agriculture Graduates/Graduates in subjects allied to

agriculture like agricultural engineering, horticulture, animal husbandry, forestry, dairy,
veterinary, poultry farming, pisciculture etc.

4. Project cost & coverage :-

The project may be taken up by Agriculture Graduates either individually or on

joint/group basis. The outer ceiling for the project by individual would be Rs.10 lakh
and for the project by group would be Rs.50 lakh. The Group may normally be of 5, of
which one could be a management graduate with qualification or experience in
business development and management. However, for availing of refinance under
ARF, the outer limit of the project cost would be Rs. 30 lakh subject to ceiling of Rs.
20 lakh towards refinance availment.

Project with outlay above Rs. 30 lakhs may be submitted to NABARD for prior

5. Margin Money (Down payment) : As per the RBI norms.

6. Interest rate for ultimate borrowers:

Banks are free to decide the rate of interest within the overall RBI guidelines.
However, for working out the financial viability and bankability of the model project we
have assumed the rate of interest as 12% p.a.

7. Interest rate on refinance from NABARD:

As per the circulars of NABARD issued from time to time.

8. Security:

Banks may take a decision as per RBI Guidelines.

9. Results of financial analysis are as under:

BCR : 1.09:1

NPW @15% DF : Rs. 1,80,942.97

IRR : 24%

10. Repayment :

The period of loan will vary between 5 years to 10 years depending on the activity.
The repayment period may include a grace period (to be decided by the financing
bank as per the individual scheme) of a maximum of 2 years.

11. Selection of borrowers :

The selection of borrowers and location of the projects may be done by the banks in
consultation with Agricultural Universities / KVKs etc in their area of operations, if

12. Terms and conditions of refinance by NABARD :

(a) Quantum of refinance : 100% of the bank loan.

(b) Rate of interest on refinance : As decided by NABARD from time to time.

(c) Margin Money assistance from 'Soft Loan Assistance Fund' of NABARD : A
maximum of 50% of the margin prescribed by banks, to meet the shortfall in
borrower's contribution, if any, where the bank is satisfied that the prospective
borrower is unable to meet the margin money requirements, could be given by
NABARD. Such assistance /loans to banks will be without any interest but the banks
may charge a service charge of 3% p.a. from the beneficiary.

(d) Eligibility norms : Eligibility to draw refinance by banks will be determined as per
instructions issued by NABARD from time to time.
(e) Mode of refinance : Refinance will be extended under Automatic Refinance Facility
(ARF) as well as schemes with prior sanction depending upon the project outlay and
amount of refinance.

13. General :

All other terms and conditions, banking procedure and lending norms as are normally
applicable to project lending and schematic refinance mutatis mutandis will also be
applicable to financing of agriclinics and agribusiness centres.

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