Announcement of IDA Assists Rural Credit Project in India on July 16, 1979

t ; FOR IMMEDIATE RELEASE · eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 I DJ, NEWS RELEASE NO. 80/2 Jui y 16, 19 79 IDA ASSISTS RURAL CREDIT PROJECT IN INDIA A project designed to expand institutional credit to farmers for increasing food production in India will be assi~ted by a credit of $250 mil- l ion from the International Development Association (IDA), an affiliate of the World Bank. The proceeds of the credit will be channeled through the Agricul- tural Refinance and Development Corporation (ARDC) to cooperative and commercial banks for lending to farmers. The project will support a two-year (1979-81) lending program of ARDC mainly for minor irrigation (including land de ve l o pme nt ) , p 1an ta t i on , ho rt i cu 1tu re , 1 i ve s tock and f i she r i es . I t a 1so includes an intensive training program primarily for the staff of land develop- ment banks and provision of equipment to State Groundwater Organizations, State Land Development Banks and ARDC to enable them to more effectively im- • plement groundwater resource evaluations . ARDC was established in 1963 to provide credit for agricultural investments by making long- and medium-term funds available to land develop- ment banks and commercial banks to refinance technically sound agricultural schemes. ARDC's association with IDA dates back to 1969. Today's credit brings the total of IDA funds committed for disbursement through ARDC to $1,110 million for 34 projects. The main economic benefit from the project would be increased agricultural production. At full development in 1986, the annual value of increased agricultural production is estimated at about $825 mill ion. The project ~s also expected to generate 115 mill ion man-days of additional employment each year. India's agricultural growth requires substantial cash investment on the part of millions of farmers. The traditional system of family financing and rural money-lending supplied a large portion of the funds in the past. But these sources are not well suited to the needs of modern agriculture. Specialized agricultural credit institutions with the ability to appraise projects and lend for them on the basis of their productivity, with access to funds outside the rural sector and with the ability to fulfill farmers' needs for production credit at reasonable cost, have come to play a crucial role in accelerating private agricultural investment. Institutional finance for agriculture in India has increased in recent years--from $194 million in 1974 to $4P million in 1978. India plans to double the total institutional • credit by about 1980-81 . Ul"\Tr- - 1'4U IC:; Money figures are expressed in U.S. dollar equivalents . .• I  - 2 - The IDA credit to India is for a term of 50 years, including 10 years of grace. It wi 11 be interest free, except for a service charge of 3/4 of 1% per annum to meet IDA's administrative costs. ARDC (Shriniketan, Dr. Annie Besant Road, Worl i, Bombay 400 018) will implement the project. • - 0 - • •