1 of 14

Role of the Private Sector in Spurring Investment for Rural Growth

04.07.2024

2 of 14

Agenda

Rural Economy – An Introduction

Public Expenditure

Success Stories/Case Studies

Way Forward & Opportunities

3 of 14

Annual FDI (USD Bn)

10^th largest economy

5^th largest economy

3^rd largest economy

GDP ($ Tn, current prices)

India: Fastest Growing Large Economy

GDP: Growth Rate of 8.2% in FY 23-24 and 7.0% in FY 22-23

Gross FDI: FDI inflow 2014-23: USD 596 billion has increased by 100% over the previous 9 financial years (2005-14: USD 298 billion) and is nearly 67% of the total FDI reported in the last 23 years (USD 971billion)

Exports: $776 B (FY23): 2x since FY14; target to grow upto ~$ 2Tn by 2030

Sources: GDP: RBI (FY24E), GDP Country Forecasts: IMF WEO ; CPI: World Bank

Trade ($ Bn)

4 of 14

Agriculture & Allied Sectors in Indian Economy

5 of 14

Agriculture & Allied Sectors in Indian Economy

The aggregate of Gross Fixed Capital Formation (GFCF), Change in Stocks (CIS) and other valuables result in Gross Capital Formation (GCF).�

GCF = GFCF + CIS + Valuables [GFCF – Major contributor, largely includes construction and machinery & equipment]

G3: Sector-wise GSVA-GCF contribution

India GCF (INR Cr.)	2020-21	2021-22	2022-23
Agriculture, forestry and fishing	5,31,037	6,13,320	7,30,148
Industry	13,50,041	18,72,557	20,18,870
Services	35,82,376	47,07,605	58,15,078
Total Gross Capital Formation	54,63,454	71,93,482	85,64,096

6 of 14

Agriculture & Allied Sectors in Indian Economy

Output in Industry sector (43%) is more dependent on investment compared to Services sector (36%) followed by Agriculture & Allied sector (15%)

Amongst the three broad sectors, Agriculture and Allied sector can be deemed to be the least dependent on investments to generate output

India’s ICOR of 4.59 hovers around India’s ICOR for services sectors of 4.63 as it contributes 61% to the country’s GSVA.

The ICORs of the Agri and Industry sectors stood at 3.82 and 7.98 respectively implying that lesser capital is required to increase unit output in agriculture and allied sector compared to the other two sectors.

Investment Rate is the ratio of GCF to GDP and implies how much investment is required to boost GDP by one unit.

Incremental Capital Output Ratio (ICOR) calculates the additional investment necessary for an economy to generate an extra unit of output

7 of 14

Rural India & Public Investment

Comprises of 65% of the total population on India

47 per cent of the rural population is dependent on agriculture for livelihood.

The rural economy contributes 46% towards the national income.

Over the last five years, the rural ecosystem has grown ~10% per annum and still has strong headroom for growth.

Rural India

#	Ministry/Department (in INR crores)	2022-2023	2023-2024	2024-2025
1	Department of Agriculture and Farmers Welfare (DAF)	99,877.01	1,16,788.96	1,17,528.79
2	Department of Agricultural Research and Education (DARE)	8,399.72	9,876.60	9,941.09
3	Department of Fertilisers (DOFert)	2,51,369.18	1,88,947.29	1,64,150.81
4	Department of Food and Public Distribution (DOFD)	2,83,744.53	2,21,924.64	2,13,019.75
5	Department of Fisheries (DOF)	1,294.38	1,701.00	2,584.50
6	Department of Animal Husbandry and Dairying (DAHD)	2,315.61	3,913.93	4,521.20
7	Ministry of Food Processing Industries (MOFPI)	1,409.94	2,911.95	3,290.00
8	Ministry of Panchayati Raj (MOPR)	901.18	984.00	1,183.64
9	Department of Rural Development (DORD)	1,76,837.39	1,71,069.46	1,77,566.10
10	Department of Land Resource (DOLR)	1,002.32	1,898.04	2,667.24
11	Ministry of Tribal Affairs (MOT)	7,273.53	7,605.00	13,000.00
	Total	8,34,424.79	7,27,620.87	7,09,453.12

India GCF (INR Cr.)	2020-21	2021-22	2022-23
Agriculture, forestry and fishing	5,31,037	6,13,320	7,30,148

8 of 14

Rural Development Schemes

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

Outlay 2024-25: ₹86,000 Crore

National Social Assistance Programme (NSAP)

Outlay 2024-25 : ₹9,652 Crore

Pradhan Mantri Awaas Yojana Grameen (PMAY-G)

�Outlay 2024-25 : ₹ 54500 Crore

National Rural Livelihoods Mission (NRLM)

Outlay 2024-25 : ₹15047 Crore

-Shyama Prasad Mukherjee RURBAN Mission

- Saansad Adarsh Gram Yojana (SAGY)

- Integrated Watershed Management Programme (IWMP)

Pradhan Mantri Gram Sadak Yojana (PMGSY)

Outlay 2024-25 : ₹ 12,000 crores

Schemes of MoRD

9 of 14

Involvement of private sector is instrumental in boosting rural growth, which is also imperative for India's economic growth

Direct CSR efforts towards rural development by constructing educational & healthcare facilities, and environmental conservation.

Encourage rural tourism through eco-friendly resorts, and cultural experiences to benefit local communities and preserve their heritage.

Accelerate renewable energy investments in rural areas to provide clean energy, create jobs, and boost local economies.

Implement skill development and vocational training tailored to rural populations

Extend microfinance to rural entrepreneurs and farmers and promote financial literacy for improved financial management

Set-up food processing units and agro-industries in rural areas to add value to farm produce and generate local employment

Introduce modern agricultural techniques, technologies, and practices to increase productivity and efficiency in rural farming.

Investment in rural infrastructure like roads and bridges to enhance connectivity and stimulate economic growth

Potential role by private sector

Rural Development – Advancing the agenda

10 of 14

Multipliers enabling rural development

Financial Inclusion

Rural Digitalization

Surge in Startups

Improvement in Infrastructure

Jaisalmer Central Cooperative Bank

Financial literacy camps in Aspirational District of Jaisalmer
Sensitization of 18,000 people spread across 140 gram-panchayats
Disbursement of INR 7.24 Cr / 1 lakh pop. due to creation of awareness on MUDRA loans

Baroda Rajasthan Kshetriya Gramin Bank

Developed in house, 2 credit modules, 1 each for KCC and retail loans
Impact - substantial reduction in TAT of loan file processing
FY 2021-22 - KCC files- 61,400, Other Agri loan files- 19,400 Accounts, Retail loan files- 5,000 Accounts

Enabling Rural Economy – Success Stories

In 2022, 35-40% of the 122 million smartphones sold in the country were bought in rural India.
Transactions on the Unified Payments Interface (UPI) platform rose 118% year-on-year at retail stores in semi-urban and rural areas in 2023.
National Payments Corporation of India (NPCI), is also onboarding district cooperative banks and rural cooperative banks to offer digital payment services, mostly from rural India with many of them being DBT beneficiaries.

Swachh Bharat Mission Grameen:

Sanitation coverage - 39% in 2014 to 100% in 2019. Over 11 Cr. Toilets & 2.23 lakh Community Sanitary Complexes constructed.
SBM-G (Phase II) - focus on sustainability and ODF Plus status by 2024-25.

Plastic Waste Management (PWM)

Sasewadi Gram Panchayat in Bhor Block of Pune district in Maharashtra
Cluster level plastic waste management system for villages designed
Private Company’s operational unit situated in a 1 Km radius of villages established
The company purchases plastic waste at Rs. 8/kg

Chikitsak - Bangalore based healthcare startup, screening for non-communicable diseases like diabetes, cardiovascular disease, etc.
Intello Labs - leveraging Artificial Intelligence, computer vision, and deep learning technologies to help farmers scale their production.
Gocoop – helps the handloom workers, artisans, and handicraft cooperatives by allowing them to market their products online.
Husk Power Systems - 100% renewable energy 'pay-as-you-go' service. 200+ sites, 450 jobs created, 3.6 MW power produced

Jaisalmer Central Cooperative Bank(Page 113)

https://www.nabard.org/auth/writereaddata/tender/pub_230623064225186.pdf

Baroda Rajasthan Kshetriya Gramin Bank (Page 18)

https://www.nabard.org/auth/writereaddata/tender/1307221832Success-Stories-and-Best-Practices-of-RRBs.pdf

UPI:

https://www.financialexpress.com/business/banking-finance-upi-transactions-soar-118-in-semi-urban-rural-stores-3343848/
https://economictimes.indiatimes.com/tech/technology/upi-growth-2-0-efforts-on-to-crack-dbt-code/articleshow/110131137.cms?from=mdr
https://telecom.economictimes.indiatimes.com/news/devices/rural-user-hangs-up-on-smartphone-buying-plans/100578576#:~:text=In%202022%2C%2035%2D40%25,sales%20recorded%20in%20rural%20areas.

Startups:

https://www.linkedin.com/pulse/8-startups-who-redefining-rural-india-hardik-hihoriya

SBM Gramin:

https://www.civilsdaily.com/news/a-critical-view-of-the-sanitation-miracle-in-rural-india/

PWM:

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1907510

11 of 14

Value Chain Stages and Start-Ups

Inputs

Crop- and weather-related information services

KrishiHub built

Marketplace for farm inputs

BigHaat built

Equipment-sharing and pay-for-use services

EM3

Harvesting

Smart/tech-enabled sowing

BharatAgri

Smart crop inputs and harvesting

Automation of farming activities

FlyBird Farm Innovations

Processing and distribution

Smart-processing business models

Seamless transportation and warehousing

StarAgri

E-trading, online marketplaces, and supply chain management

Ninjacart

Services

Data-backed risk mitigation services

Gramcover

Other agri-financial services

Ergos

Integrated play

Indigo Ag

Rural Economy & Agri Tech Initiatives

Agritech Startups raised Rs 6,600 Cr/USD 790 Mn in 4 years, growing over 50% annually, per Economic Survey 2022-23

Inputs:

KrishiHub built an advisory platform to provide farmers with crop advisories, news and information about government schemes, tutorials, and articles on modern farming practices.
BigHaat built an online inputs marketplace to improve access to agricultural machinery, seeds, and fertilisers.
EM3 created a platform to facilitate farm equipment rentals (e.g., tractors) and outsourced services (e.g., fertiliser application).

Harvesting

BharatAgri enables smart farming practices through personalised, algorithm-based advisories on soil, water, and other conditions.
Plenty is developing indoor vertical farming to reduce farmers’ dependency on external environmental variations and pesticides.
FlyBird Farm Innovations reduces water and electricity consumption by using smart equipment like sensor-based irrigation controllers and digital motor starters.

Processing and distribution

StarAgri provides warehousing, collateral management, and logistics solutions to increase farmer realizations and supply-chain efficiency.
Ninjacart built online marketplace models that connect farmers directly to businesses to disintermediate the supply chain and reduce distribution inefficiencies.

Services

GramCover provides tech-enabled insurance solutions with features like paperless onboarding and instant policy issuance as well as risk advisory for the rural ecosystem.
Ergos enables farmers to convert their grains into tradeable digital assets and helps them get better prices by giving them the flexibility to sell their produce at any time.

Integrated play

1. Indigo Ag provides agronomy advisory services, quality testing, contract farming, an offtake marketplace, and storage and transportation services to farmers.

12 of 14

Agriculture

Agriculture and Allied Sectors - Opportunities

FDI Inflows

Upward trend - agricultural exports rose to $53.1 Bn during FY 2022-23
Indian agrochemical market will reach 8.1 USD Billions in 2025. Currently growing at a CAGR of 8.92%
Highest number of organic farmers in the world - 44.3 Lakhs, 59.1 Lakh ha area has been brought under organic farming by 2021-22

Food Processing

$535 bn Indian Food Processing market value by 2026

Animal Husbandry & Dairying Sector

Cheese Market: Valued at US$ 1.06 Bn to grow @20.09% CAGR 2024-32 to US$ 6.14 Bn (2032)

8.1% - Expected CAGR of Indian Poultry Market (2024-2032)

Fruits & Vegetables Sector

$1.63 Bn – Fresh Fruits and Vegetables Exported

3^rd Largest Food & Grocery Market in the world; estimated value - USD 850 Bn by 2025

$1.5 Bn – Processed Fruits and Vegetables Exported

INR 10,900 Cr – PLI Scheme

41 – Mega Food Parks being developed

Fisheries & Aquaculture Sector

$8.09 Bn – Marine Products 2022-23

8% - Average annual growth rate of the fisheries sector in last 8 years

Pradhan Mantri Matsya Sampada Yojana (PMMSY) – for blue revolution, INR 20,050 Cr (till FY 24-25)

13 of 14

Thank You

14 of 14

Source: Bain and Company - Innovation in India’s Rural Economy

Annexure