Case Study Of India:

An Emerging
Economy
By : GROUP - 1
Trina Bhagat(05), Meghraj Gawande (09), Hemant Kalamkar (11),
Kamlesh Kunhara (16), Rishika Mittal (30), Sourabh Walke (34),
Sagar Shinde (38), Jyoti Jadhav (51) 1
The beginning…..
 1960’s – Green Revolution.
 Poverty alleviation.
 Nationalization of Banks (69’ & 80’).
 Abuse of Banks for Political purposes e.g.. Loan
waivers and loan melas.
 Other regulations- branch banking, mandatory
quotas, below market interest rates and
recapitalization and refinancing of loss making
institutions.
 Establishment of RRB’s and NABARD.

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Results…
 Expansion of commercial banks into rural areas.

 Avg. population covered by a bank branch declined

significantly.

 More than half the branches of all the banks are

located in rural areas.

 Breakdown in borrower discipline and weakened

financial sector.
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Financial reforms in India..

 Competition.

 Priority Sector.

 Prudential Norms.

 Interest Rates.

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Results…
 Decline in rural poverty.

 Microfinance has been attempted on a large scale since the

early 1990s. The importance of self-help groups (SHGs)
was also recognized in the late 1980s,

 1992 - a pilot linkage program was initiated under the

directive of the Government to link SHGs with banks either
directly or through NGOs as guarantors or intermediaries.

 Several innovative schemes for the rural sector.

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Socio-demographic profile

 Total Population-
1,166,079,217 (July 2009 est. CIA)
1,028.7 million (2001 Census)

 Rural Population-72.2%,
Male: 381,668,992,
Female: 360,948,755 (2001 Census)

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Age Structure

 0–14 years: 30.8%, male: 188,208,196, female:

171,356,024

 15–64 years: 64.3%, male: 386,432,921, female:

364,215,759

 65+ years: 4.9%, male: 27,258,259, female: 30,031,289

(2007 est.)

 Median Age = 25.1 yrs

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Literacy Rate
79.9%
Rural 1981 1991 2001
Literacy

% of literates 36 45 59

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Sex Ratio

 at birth: 1.12 male(s)/female

 under 15 years: 1.098 male(s)/female

 15–64 years: 1.061 male(s)/female

 65 years and over: 0.908 male(s)/female

 totalpopulation: 1.064 male(s)/female
(2006 est.)
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Life Expectancy

 Total population: 69.89 years

 Male: 67.46 years
 female: 72.61 years (2007 est.)

 Percent of the population under the poverty

line - 22% (2006 est.)
 Unemployment Rate - 7.8%

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Religions
 Hindu 70.5%

 Muslim 23.4%

 Christian 2.3%

 Sikh 1.8%

 Buddhists 0.8%

 Jains 0.4%

 Others 0.7%
(Source: 2001 Census)
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Scheduled Castes and Tribes

 Scheduled Castes: 16.2% (2001 Census)

 Scheduled Tribes: 8.2% (2001 Census)

Family Structure
 Nuclear families.
 House type

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Economic Scenario

 Rural India was considered a dark area,

suffering from poverty, illiteracy, over
population, and social, linguistic and religious
discord.

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Changing Scenario
 Growing economic power of the villages.

 Green , White and Blue revolution.

 Increase in MSP of food grains.

 The allocation for rural development has increased from Rs. 8,900
crore in the Seventh Plan to Rs. 34,400 crore, Rs. 89,000 crore,
and Rs. 1,20,000 crore in the Eighth, Ninth, and Tenth Plans
respectively.

 The flow of agriculture credit has increased from Rs. 32,000 crore
(1997-98) to Rs. 1, 05,000 crore (2004-05)
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Population below the poverty line
(Rural)
Period No. Of persons % of persons Poverty line
(million) (Rs.)

1983 252 46 89.5

1993- 244 37 206
94
1999- 193 27 328
2000

Source: Human development Report, 2001

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Transition of Rural Economy
 Food grain crops  Non-food grain crops, cash crops.

 On-land activities  Off-land allied activities like

livestock and fisheries

 Farm activities  Non-farm activities, including

manufacturing and services

 Farm sector contributes only 53 percent whereas the

non-farm sector contributes 47 percent to the total rural
income.
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Human Development Index (HDI)

 The HDI improved significantly by 26 percent in the 1980s

and by another 24 percent in 1990s, both in rural as well as in
urban areas.

 Rapid increase in the rural literacy level (59 percent by 2001),

improvement in health indicators, increase in per capita
expenditure, improvement in housing, decline in poverty
levels and increase in life expectancy are factors that have
resulted in the improvement of human development indicators
in rural India.

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Role of Public Sector
 Before 1950

 After Independence the country was facing problems like

inequalities in income and low levels of employment, regional
imbalances in economic development and lack of trained
manpower.

 India at that time was predominantly an agrarian economy with a

weak industrial base, low level of savings, inadequate investments
and infrastructure facilities.

 Public Sector was seen as an instrument for self-reliant economic

growth.
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Major contributions of Public Sector

 Filling of gaps in terms of industrial structure.

 Employment.
 Balanced regional developments.
 Contributions to the public exchequer.
 Foreign exchange earnings.
 Development of ancillary industries.
 Research and Development.
 Community development.
 Social justice.

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Private Sector
 The opening up of Indian economy has led to free inflow of
foreign direct investment (FDI) along with modern cutting
edge technology.
 The investment quantum grew from 56% in the first half of
1990 to 71 % in the second half of 1990.
 Financial services, transport and social services.
 Manufacturing, infrastructure, agriculture products, IT and
Telecommunication.
 Pharmaceutical, biotechnology, semi conductor, contract
research, and product research and development.

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Private Sector’s role
Employment generation thus eliminating poverty
Increased quality of life
Increased access to essential items
Increased production opportunities
Lowered prices of essential items
Increased value of human capital
Improved social life of the middle class Indian
Decreased the percentage of people living below the poverty line in India
Changed the age old perception of poor agriculture based country to a rising
manufacturing based country
Effected increased research and development activity and spending
Effected better higher education facilities especially in technical fields
Ensured fair competition amongst market players
Dissolved the concept of monopoly and thus neutralized market manipulation
practices
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Important Financial products

 Kisan Vikas Patras

 Kisan Credit Cards

 Swarojgar Credit Cards

 Rashtriya Krishi Bima Yojana

 Micro-insurance

 Microfinance

 Chit Funds
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Financial Products
 Kisan Vikas Patras

 Kisan Vikas Patra (KVP) is a saving instrument that provides interest income
similar to bonds.

 Amount invested in Kisan Vikas Patra doubles on maturity after 8 years & 7
months.

 Some people have a misconception that only a farmer can invest money in Kisan
Vikas Patra.

 However, it is absolutely false. Anyone wishing to invest money at safe places can
go for Kisan Vikas Patra. 

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Financial Products
 Kisan Credit Cards

 In the year 1998, NABARD formulated a Model Kisan Credit Card Scheme in
consultation with major banks .

 Aims at provision of adequate and timely support from the banking system to the
farmers for their cultivation needs including purchase of inputs in a flexible and
cost effective manner.

 Revolving cash credit facility and Limit to be fixed on the basis of operational
land holding, cropping pattern and scales of finance.

 Access to adequate and timely credit to farmer.

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Financial Products
 Swarojgar Credit Cards
 Introduced in September 2003

 Aims at providing adequate and timely credit from the banking system in a flexible,
hassle free and cost effective manner.

 Any scheme/project that are income generating/ employment generating may be

covered under the scheme. The facility may also include a reasonable component for
consumption needs.

 SCC is a credit delivery mode and not a purpose. Coverage of SCC will not make a
unit ineligible for subsidy. Banks can issue SCCs to target borrowers of SCC scheme
for disbursing credit under any scheme whether it is covered under subsidy or not.

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Financial Products

 Rashtriya Krishi Bima Yojana(RKBY)

 To provide insurance coverage and financial support to the

farmers in the event of failure of any of the notified crop as a
result of natural calamities, pests & diseases.

 To encourage the farmers to adopt progressive farming practices,

high value in-puts and higher technology in Agriculture.

 To help stabilise farm incomes, particularly in disaster years.

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Financial products
 Chit Funds

 Chit funds are the financing options where people find the financing
option simple and easily accessible.

 People become members of registered or unregistered chit fund groups

and pay a certain sum of money every month or week, as required
under the fund management rules.

 Each month, a member can take money from the accumulated fund
through an auction.This provides easy access to credit and has limited
process formalities
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Role of government
 The Government of India has designed and implemented
several issue-based programs aimed at rural
development.

 The Eleventh five year plan also aims at the theme of

inclusive growth concentrating on the upliftment of the
rural poor.

 Till now government of India was providing only

fertilizer subsidy but by April 2010 the government of
India is planning to provide nutrient subsidy.
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Changing Infrastructure

Pradhan mantri gram sadak yojana

 100% centrally sponsored scheme.

 Launched to provide connectivity to all unconnected habitations

with all-weather roads.

Pradhan Mantri Gramodaya Yojana

 Announced in 2001-02 budget ,this scheme announced Rs 5000

crore for infrastructural developments in villages, primarily roads

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Employment Opportunities

Pradhan Mantri Rojagar Yojana

 To promote the self-employment among the educated yet unemployed
rural youth.
 To provide skill based training and link access to bank credit

Sampoorna Grameen Rojagar Yojana

 Comprises the Employment Assurance Scheme and the Jawahar Gram
Samriddhi Yojana(JGSY) which together contributed 3100 lakh man
days in 2002-03.

Swarnajayanti Gram Swarozgar Yojana

 In effect for the self-employment of the poor since 1999

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Housing for All
 The 1991 census revealed the presence of 1.4 crore
households without shelter or residing in
unserviceable kuccha houses.

 The government launched a scheme “Housing for

all” by facilitating construction of 20 Lakh additional
housing units.

 Indira Awaas Yojana has the credit of 93 lakh houses

by 2003 at an expense of 16,000 crore.
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Developmental Activities

DISTRICT RURAL DEVELOPMENT

AGENCY
 The District Rural Development Agency (DRDA) has traditionally been
the principal organ at the District level to oversee the implementation of
different anti-poverty programmes.

SCHEME FOR PROMOTING AGRICLINICS AND

AGRIBUSINESS CENTRES
 With the diversification and modernisation of agricultural practices, there is a
need to augment support and extension services for agriculture. 
 For this purpose, a scheme for setting up agriclinics and agribusiness centres by
agriculture graduates has been launched by GoI with the support of NABARD. 
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Challenges faced

 The challenges faced by the present players in

the rural area are-
 Regulation and distribution
 Competition
 Scale of investment
 Customers scattered over wide areas
 Rural infrastructure
 Irregularity in payments
 Operational Challenges

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Punar-ujjivan Loan
 “Punar-ujjivan” or an rehabilitation loan is the product which we
intend to offer .

 In times of humanitarian crisis like floods, famine, tsunami,

earthquake and epidemics etc. rural customers require fast credit
and prefer going to the moneylenders.

 There is a response period followed by a rehabilitation period in

which we intend to offer help to the borrowers.

 “Punar-ujjivan” Loan shall be provided to the customer with the

minimum documentation possible which will make it possible for
him to have access at the time required.
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Punar-ujjivan Loan

 The institution shall take care of the following factors

for keeping the success certified-
 Credit worthiness of the borrower is established.
 Preferably SHG member given loan.

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THANK YOU..

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