NABARD Annual Report 2023-2024 PDF

ANNUAL REPORT 2023–24 ₹ National Bank for Agriculture and Rural Development  ANNUAL REPORT 2023–24 National Bank for Agriculture and Rural Development Notes to the NABARD Annual Report 2023–24 1. AY before a calendar year denotes the agriculture...

ANNUAL REPORT 2023–24 ₹ National Bank for Agriculture and Rural Development  ANNUAL REPORT 2023–24 National Bank for Agriculture and Rural Development Notes to the NABARD Annual Report 2023–24 1. AY before a calendar year denotes the agriculture year or the 12-month period ending 30 June of the year. For instance, AY2024 ends on 30 June 2024. 2. FY before a calendar year denotes the fiscal year or the 12-month period ending 31 March of the year. For instance, FY2024 ends on 31 March 2024. 3. Given the phasing of projects, disbursement in any FY may not correspond to sanction for that FY. 4. As a result of rounding off, numbers in tables may not add to totals, and percentages in figures have been adjusted to add to 100. 5. Unless otherwise mentioned ‘$’ in this report refers to US$. 6. Regions as defined by NABARD: South: Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Puducherry, and Lakshadweep West: Gujarat, Goa, Maharashtra, Dadra & Nagar Haveli, and Daman & Diu North: Haryana, Himachal Pradesh, Punjab, Rajasthan, Jammu & Kashmir, Delhi, and Chandigarh Central: Madhya Pradesh, Chhattisgarh, Uttar Pradesh, and Uttarakhand East: Bihar, Jharkhand, Odisha, West Bengal and Andaman & Nicobar Islands North East: Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim 7. Dotted bottom borders of boxes, showcases, tables, etc. indicate that the exhibit is continuing to the next page. On the cover: When hands come together for synchronised action, they support and strengthen each other to create synergy. The overall gain is often greater than the additive strength and skills of the hands that work together. The cover is an artist’s interpretation of this socioeconomic phenomenon in the context of India’s agriculture and rural development. Photo credits: All photos in the report including those on the cover are courtesy NABARD. Cover photos are related to activities at Anjarakandy Farmers’ Service Cooperative Bank, Idkidu Primary Agricultural Credit Society, and Ankalkhop Vividh Karyakari Sahkari Society Limited. Custom publishing for NABARD: Lucid Solutions, www.lucidsolutionsonline.com Printing and production for NABARD: Print Plus Private Limited, Mumbai iii iv  BOARD OF DIRECTORS as on 31 March 2024 Chairman appointed under Section 6(1)(a) of the NABARD Act, 1981 Shri Shaji K. V. Directors appointed under Section 6(1)(b) of the NABARD Act, 1981 Dr Urvish Shah Directors appointed under Section 6(1)(c) of the NABARD Act, 1981 Dr M. D. Patra Smt. Revathy Iyer Dr Ravindra H. Dholakia Directors appointed under Section 6(1)(d) of the NABARD Act, 1981 Shri Manoj Ahuja Shri Shailesh Kumar Singh Dr M. P. Tangirala Directors appointed under Section 6(1)(e) of the NABARD Act, 1981 Shri Ashok Barnwal Shri Gopal Krishna Dwivedi Shri Vinod Kumar Suman Directors appointed under Section 6(3) of the NABARD Act, 1981 Shri Goverdhan Singh Rawat Dr Ajay K. Sood  FROM THE CHAIRMAN... I n FY2024, the Indian economy demonstrated resilience against significant global challenges, achieving robust growth of 8.2%. By maintaining a growth rate exceeding 7% for the third consecutive fiscal year, India has emerged as the world’s fifth-largest economy, establishing a formidable presence on the global stage. This accomplishment is remarkable, particularly against the backdrop of a global economy grappling with rising geopolitical tensions, persistent but decreasing inflation, and subdued activity levels. It highlights India’s potential as a hub of innovation and opportunity, poised to make an even more dynamic contribution to the global economy in the coming years. India’s unwavering focus on capital formation has fuelled this growth momentum, with substantial government spending addressing infrastructure and logistics bottlenecks. NABARD has been investing extensively in rural infrastructure and agriculture to enhance the productivity of the rural economy. Over the past decades, NABARD’s rural infrastructure financing has reached a cumulative sanction of ₹8.2 lakh crore, including ₹61,000 crore during FY2024. Our flagship Rural Infrastructure Development Fund has had a transformational impact on the rural landscape, creating irrigation potential for 422.2 lakh ha, laying 5.6 lakh km of rural roads, constructing 14.1 lakh meter of rural bridges, and generating 3,096 crore person-days of non-recurring employment. Cooperatives in India play a transformative role in promoting equitable development, fostering economic inclusivity, and building resilient communities. Recognising their importance, NABARD has dedicated a theme chapter to cooperatives in the Annual Report 2023–24.  The rural credit structure is pivotal for financial inclusion and delivering credit to rural areas. NABARD has strengthened local economies and contributed to an inclusive financial and credit structure across India’s rural landscape. We are facilitating the digitisation of 63,000 primary agricultural credit societies (PACS) over 5 years. This digitisation effort is set to enhance transaction speed, access to payment services, and supervision for rural stakeholders. On 24 February 2024, 18,000 digitised PACS were inaugurated by the Prime Minister of India at Bharat Mandapam, New Delhi. NABARD has remained responsive to emerging needs of India, aligning its policies with national priorities. The shrinking average size of agricultural landholdings poses a challenge to diversification of agricultural activities and increase in farmer earnings. To address this, NABARD has promoted 7,355 farmer producers’ organisations with 25 lakh farmer members, of which about 82% are small and marginal farmers. NABARD has pioneered various sustainable and inclusive development models for fostering rural prosperity. Notably, the Self-Help Group–Bank Linkage Programme (SHG-BLP), launched in 1992, has grown to link 1.44 crore SHGs with savings and 77.4 lakh SHGs with credit, involving ₹65,089.20 crore in deposits and ₹2.59 lakh crore in outstanding loans. Climate change presents significant risks for agriculture and rural livelihoods. NABARD is making best efforts for safeguarding livelihoods by promoting climate resilience and sustainable rural development. As the National Implementing Entity of three key climate financing funds, we have funded 40 projects worth ₹1,971.5 crore. NABARD has also developed a green taxonomy to classify its development and business portfolio for prioritising investments and mobilising resources for the green portfolios. I am pleased to announce that NABARD’s balance sheet reached ₹9.1 lakh crore as of 31 March 2024, reflecting a 13.6% growth over FY2023. NABARD also mobilised ₹1,040.5 crore through India’s first AAA Rated rupee- denominated social bonds in FY2024, aligning investments with social impact. Through NABARD’s social bonds, investors can play a role in building a more equitable and sustainable future for all. NABARD’s vision for the future is encapsulated in its Five-Year Strategic Plan, ‘Pragati 1.0,’ starting 1 April 2023, and the repositioning initiative ‘UNNATI’ to enhance our internal capabilities. We remain committed to making a meaningful impact through partnerships, innovative solutions, and prudent financial stewardship. Together with our stakeholders, we envision a future where every rural household thrives and contributes to sustainable prosperity. I extend my gratitude to our stakeholders, partners, and the committed team at NABARD for their unwavering support and commitment. Let us continue our journey towards a prosperous and resilient rural India. Shaji K. V. Chairman vii  NABARD AT A GLANCE (Amount in ₹ crore as on 31 March) % growth % growth Sources of Funds FY2024 FY2023 over Uses of Funds FY2024 FY2023 over FY2023 FY2023 Own Funds 72,867 66,766 9.1 Cash and investments 1,07,048 64,692 65.5 Capital 17,080 17,080 0.0 Cash and bank balance 29,899 16,092 85.8 Reserves and surplus 55,787 49,686 12.3 Government securities and National Rural Credit 69,694 48,320 44.2 other investments (Long-Term Operations) 16,106 16,102 0.0 Triparty repo lending 7,455 280 2562.5 & National Rural Credit (Stabilisation) funds Refinance to enhance Deposits 3,01,958 2,78,101 8.6 ground level credit for rural 4,68,593 4,24,642 10.4 production and investment Short-Term Cooperative 50,518 50,432 0.2 Production and marketing Rural Credit Fund 1,58,706 1,40,913 12.6 credit Short-Term fund for Regional 15,158 15,047 0.7 Medium- & long-term Rural Banks 2,68,248 2,52,039 6.4 project loans* Long-Term Rural Credit Fund 45,175 44,996 0.4 Direct refinance to district Tea, coffee, and rubber 20,504 13,956 46.9 52 57 -8.8 central cooperative banks deposits Producers’ Organisation Rural Infrastructure 1 6 -83.3 1,86,685 1,63,069 14.5 Development Fund Development Fund deposits Credit facility to federations 20,583 17,355 18.6 Warehouse Infrastructure 3,890 4,050 -4.0 Fund Green Climate Fund 552 373 48.0 Food Processing Fund 480 450 6.7 Infrastructure creation 2,65,192 2,45,017 8.2 Borrowings in bond market 2,86,151 2,46,677 16.0 loans Bonds & debentures 1,60,621 1,21,148 32.6 Rural Infrastructure 1,70,007 1,54,070 10.3 Development Fund Tax free bonds 5,000 5,000 0.0 Long Term Irrigation Fund 53,617 53,966 -0.6 Bonds for Long-Term 57,667 57,666 0.0 Dairy processing and Irrigation Fund Infrastructure Development 1,508 1,500 0.5 Bonds for Pradhan Mantri 48,810 48,810 0.0 Fund Awas Yojana–Gramin Bonds for Swachh Bharat Warehouse Infrastructure 12,298 12,298 0.0 3,386 4,091 -17.2 Mission–Grameen Fund Bonds for Micro-Irrigation NABARD Infrastructure 1,755 1,755 0.0 32,404 27,890 16.2 Fund Development Assistance Borrowings in money Food Processing Fund 431 422 2.1 2,01,083 1,64,081 22.6 market Micro-Irrigation Fund 3,037 2,516 20.7 Certificates of deposit Fisheries and Aquaculture 23,630 18,386 28.5 (discounted value) Infrastructure Development 802 562 42.7 Commercial papers Fund 52,113 42,538 22.5 (discounted value) Social sector investments 61,117 61,117 0.0 Term money borrowings 2,508 1,942 29.1 Pradhan Mantri Awas Term loans from banks 94,007 77,455 21.4 48,819 48,819 0.0 Yojana-Gramin Foreign currency loan 552 910 -39.3 Swachh Bharat Mission- Borrowings Jawaharlal 12,298 12,298 0.0 3 3 0.0 Grameen Nehru National Solar Mission Others 337 369 -8.7 Triparty Repo Dealing and 28,270 19,172 47.5 Other Loans (Including Settlement & Repo Jawaharlal Nehru National 5 31 -83.9 Borrowings against short Solar Mission) 0 3675 -100.0 term deposits Long-term non-project Others (liabilities and 332 338 -1.8 32,698 29,925 9.3 loans funds) Sub-total of loans and Other liabilities 24,501 22,107 10.8 7,95,239 7,31,145 8.8 advances Other funds 8,197 7,818 4.8 Fixed assets & other assets 8,576 5,815 47.5 Total 9,10,863 8,01,652 13.6 Total 9,10,863 8,01,652 13.6 * including amount subscribed to Special Development Debentures viii of SCARDBs which are in the nature of Deemed Advances.  NABARD AT A GLANCE (Amount in ₹ crore as on 31 March) A) Financial support (disbursements) I) Refinance: Short term credit (maximum outstanding) (₹ crore) Particulars FY2024 FY2023 % change from FY2023 ST-SAO, StCB 50,518 49,405 2.3 ST-SAO, RRB 15,158 14,819 2.3 ST-OSAO, StCB 26,109 19,654 32.8 ST-OSAO, RRB 11,905 9,463 25.8 Additional ST-SAO, StCB 57,659 47,714 20.8 Additional ST-SAO, RRB 21,804 17,851 22.1 RRB = Regional Rural Bank, SFB = Small Finance Bank, StCB = State Cooperative Bank, ST–SAO = Short-Term Credit for Seasonal Agricultural Operations, ST–OSAO = Short-Term Credit for Purposes Other than Seasonal Agricultural Operations. Note: ST (OSAO), RRB includes SFB refinance of ₹80 crore (in FY2024) and ₹40 crore (in FY2023). II) Refinance: Investment credit (₹ crore) Particulars FY2024 FY2023 % change from FY2023 Agriculture and allied activities 52,807 27,793 90.0 Non-farm sector 53,678 54,400 -1.3 Self-help groups 22,344 22,278 0.3 Rural housing 3,658 2,544 43.8 III) Credit support (₹ crore) Particulars FY2024 FY2023 % change from FY2023 Rural Infrastructure Development Fund 42,564 37,317 14.1 Long Term Irrigation Fund 2,605 3,069 -15.1 Warehouse Infrastructure Fund 367 461 -20.4 Food Processing Fund 106 142 -25.4 NABARD Infrastructure Development Assistance 7304 6,330 15.4 Direct refinance assistance to cooperative banks 26,869 18,179 47.8 Credit facility to federations 39,240 31,437 24.8 Dairy Processing and Infrastructure Development Fund 176 735 -76.1 Fisheries and Aquaculture Infrastructure Development Fund 289 226 27.9 B) Development initiatives Particulars FY2024 FY2023 % change from FY2023 Watershed development projects (no.) 60 86 -30.2    Area (ha) 60,000 80,022 -25.0 Families benefitted (no.) 24,261 34,774 -30.2 Springshed development projects (no.) 14 30 -53.3    Area (ha) 4,200 8,850 -52.5 Families benefitted (no.) 882 1,890 -53.3 Projects under Tribal Development Fund (no.) 59 68 -13.2    Area (acre) 14,561 17,793 -18.2 Families benefitted (no.) 18,844 24,133 -21.9 ix  Annual Report 2023–2­4 CHIEF GENERAL MANAGERS Sunil Kumar Niraj Kumar Verma Nilay D. Kapoor C. Udayabhaskar Monomoy Mukherjee T. Ramesh Bihar MD, NABCONS HRMD & LAW DFIBT SECY & CCD Karnataka Gyanendra Mani Rajiv Siwach S. K. Dora Susheela Chintala Raghunath B. Gopa Kumaran Nair G. Chhattisgarh Rajasthan Uttar Pradesh Telangana Punjab & Haryana Kerala Kuldeep Singh Baiju N. Kurup Sunil Kumar Kanhu Charan Badatya Usha Ramesh P. K. Bhardwaj ID SPD Madhya Pradesh DEAR West Bengal DPSP Nirupam Mehrotra L. Leivang Suparna Tandon S. K. K. Mishra V. K. Bist Bhallamudi Sridhar BIRD MCID RMD Odisha Uttarakhand Jammu & Kashmir M. S. Rao D. Hegde M. R. Gopal M. Nageswara Rao B. Uday Bhaskar B. K. Singhal NBSC MD, NABFINS Andhra Pradesh DSM FSDD Gujarat N. Neeraja S. D. Rohilla Manikumar S. Sudhir K. Roy R. Shankar Narayan S. K. Jahagirdar DOR DDMABI SPPID DOS Tamil Nadu Jharkhand x  Annual Report 2023–2­4 Subrat Kumar Nanda Dinesh Poolakkunnath R. V. Ramakrishna S. Srinath C. Saraswathi R. Anand IDD DCAS CPD AD & FD DIT OFDD Tiakala Ao Rashmi A. Darad Satish B. Rao Kamalesh Kumar Partho Saha Nagaland Maharashtra CPD DSSI BID OICs OF OFFICER ON REGIONAL DEPUTATION OFFICES/ U. Dinesh Shanbhag CELLS Archana Singh K. V. S. S. L. V. Prasada Rao CVO Andaman & Nicobar Mizoram Sanjay Kumar Gupta Loken Das Vivek Pathania Dr. Milind R. Bhirud Prabhudatta Sahoo Nabin Kumar Roy Sikkim Tripura Himachal Pradesh Goa Meghalaya Assam Arobinda Kumar Sarkar V. S. Balasubramanian Vaseeharan S. S. Damodar Mishra Surinder Singh Bendang Aier BIRD, Kolkata BIRD, Mangaluru New Delhi Arunachal Pradesh Srinagar Cell Manipur CEOs OF NABARD SUBSIDIARIES Rahul Uppal Bonani Roychoudhury Bibhu Prasad Kar Srinivasan Ramesh Vikas Bhatt NABSanrakshan NABSAMRUDDHI NABFOUNDATION NABKISAN NABVENTURES All designations and affiliations as on 31 March 2024. xi  CONTENTS ANNUAL REPORT 2023–24 1. India and the World: The Economy in FY2024 1.1 Global macro-financial conditions 4 1.2 Domestic macroeconomic developments 5 1.3 Resilience of agriculture to uneven rainfall patterns 8 1.4 Momentum gained in rural economic activity 12 1.5 The economic outlook 16 Notes 17 Appendix to Chapter 1 19 2. Cooperatives: Tackling Challenges, Building Opportunities 2.1 Principles of cooperatives 22 2.2 History of the cooperative movement in India 22 2.3 Constitutional framework of cooperatives in India 23 2.4 Indian cooperatives in the global context 24 2.5 Cooperative scenario in India 24 2.6 NABARD’s mandate of supporting rural cooperatives 26 2.7 NABARD initiatives in developing the cooperative sector 28 2.8 Way forward 29 Notes 30 Appendix to Chapter 2 31 3. Investing in a Sustainable Tomorrow 3.1 Climate action 36 3.2 Watershed Development Programme 39 3.3 Tribal Development Fund 44 3.4 Towards achieving harmony with nature 46 Notes 46 4. Towards Inclusive Development 4.1 Scaling-up microfinance initiatives 48 4.2 Interventions for better livelihoods 49 4.3 Farmer producers’ organisations 51 4.4 Promoting farm sector development 54 4.5 Strengthening the off-farm sector 56 4.6 Supporting rural entrepreneurs, start-ups, marketing, and branding 57 4.7 Supporting research and sharing knowledge 60 4.8 Inclusive development through sustainable livelihoods 62 Notes 62 xii  Contents 5. Financing Rural Infrastructure for Sustainable Development 5.1 Rural Infrastructure Development Fund 66 5.2 Rural Infrastructure Promotion Fund 67 5.3 Long Term Irrigation Fund 69 5.4 Micro-Irrigation Fund 69 5.5 NABARD Infrastructure Development Assistance 70 5.6 Post-harvest infrastructure 72 5.7 Other infrastructure initiatives 75 5.8 Way forward 78 Notes 78 6. Credit Planning and Delivery for Financial Inclusion 6.1 Credit planning 80 6.2 Refinance activities 81 6.3 Refinance trends 81 6.4 Other credit expansion instruments 85 6.5 New initiatives in refinance during FY2024 88 6.6 Improving efficiency in the credit delivery ecosystem 89 6.7 Strengthening financial inclusion 90 6.8 Way forward 95 Notes 96 7. Supervisory Role of NABARD 7.1 Supervised entities of NABARD 98 7.2 Supervisory ecosystem: Major developments in FY2024 99 7.3 Other supervisory initiatives 101 7.4 Information technology and cyber security initiatives 103 7.5 Way forward 104 Note 104 Appendix to Chapter 7 105 8. Empowering Rural Financial Institutions 8.1 Short-term rural credit cooperatives 110 8.2 Long-term rural credit cooperatives 111 8.3 Important developments in the cooperative sector 111 8.4 Cooperative Development Fund 112 8.5 Regional rural banks 113 8.6 Roadmap for RFIs 117 Notes 118 Appendix to Chapter 8 119 9. People—Processes and Policies 9.1 Nurturing and supporting our people 124 9.2 Risk management and effective internal control 126 9.3 Strengthening transparency and vigilance 128 9.4 Building sustainable digital infrastructure 130 9.5 Data management and modernisation of information systems 132 9.6 Parliamentary committee visits and parliamentary questions 133 9.7 Promotion of Rajbhasha 134 xiii  Contents 9.8 Aligning marketing and communications strategy 134 9.9 A dynamic NABARD for India’s rural development 135 Notes 136 Appendix to Chapter 9 137 10 Leveraging Finance for Growth 10.1 Sources of funds 140 10.2 Uses of funds 142 10.3 Income and expenditure 146 10.4 NABARD’s investments in the agriculture and rural ecosystem 146 10.5 Strategic investment and mobilisation for impact and growth 149 Annexe to Chapter 10 150 Notes 158 Corporate Governance 161 Annual Accounts 2023–24 Balance Sheet, Profit & Loss Account, and Cash Flow of NABARD 177    Independent Auditor’s Report 177    Annexure 1 to Independent Auditor’s Report 180    Schedule 18 198 Consolidated Balance Sheet, Profit & Loss Account, and Cash Flow of NABARD 223    Independent Auditor’s Report 223    Annexure 1 to Independent Auditor’s Report 226    Schedule 18 245 E-Mail Addresses of NABARD Head Office Departments and Subsidiaries at Mumbai 258 Regional Offices/Cells/Training Establishments/Subsidiaries 259 TABLES 1.1 Global economic indicators (year-on-year growth %) 5 1.2 Share of cereals/food as a percentage of average MPCE 9 A1.1 Production of tomatoes, onions, and potatoes (million tonne) 20 A2.1 Development milestones for the cooperative movement in India 31 A2.2 Cooperative society membership by sector (2023) 33 A2.3 Cooperative society membership by state (2023) 34 4.1 Performance of the Self-Help Group–Bank Linkage Programme up to FY2024 48 4.2 Skilling and Entrepreneurship Development Programmes (as on 31 March 2024) 49 4.3 Promotion of farmer producers’ organisations 52 A8.1 Consolidated performance of StCBs and DCCBs (amount in ₹ crore) 119 A8.2 Overview of financial position of SCARDBs and PCARDBs (amount in ₹ crore) 120 A8.3 Grant support to cooperatives from CDF in FY2024 120 A8.4 Consolidated performance of RRBs (amount in ₹ crore) 121 xiv  Contents A8.5 Achievement of PSL targets by RRBs in FY2024 121 9.1 Parliamentary Committee visits relevant to NABARD in FY2024 133 10.1 Strategic investments and returns 148 FIGURES 1.1 Growth trend of India’s GDP at 2011–12 prices (%) 5 1.2 Consumer price index inflation in India, annual average (%) 6 1.3 Fiscal deficit and capital expenditure as a percentage of GDP 7 1.4 Current account deficit as a percentage of GDP 7 1.5 Agriculture and allied sector GVA growth at 2011–12 prices (%) 8 1.6 Foodgrain production in India (million tonne) 9 1.7 Annual flow of credit to agriculture 10 1.8 Agricultural exports ($ billion) 11 1.9 Trends in urban and rural MPCE 12 1.10 Unemployment rates (%) and labour force participation rates (%) (FY2018–FY2023) 13 1.11 Rural activity indicators (change in FY2024 monthly averages over FY2023 monthly averages) 14 A1.1 Annual milk production (million tonne) and annual growth rate (%) 19 A1.2 Commercial crop production in India 19 2.1 Seven principles of cooperatives 22 2.2 Development milestones for the cooperative movement in India 23 2.3 Cooperative societies by sector (number in lakh) 24 S2.1.1 Milk production in India 25 2.4 Cooperative membership as a percentage of population by state (2023) 26 2.5 NABARD’s mandate of supporting the development of rural cooperatives 27 2.6 NABARD-initiated project for CBS in cooperatives 28 3.1 Overview of climate change initiatives by fund type 37 3.2 Soil restoration and rehabilitation initiative under KfW Soil Programme 41 3.3 A snapshot of NABARD Bhuvan Portal and Thematic Layers 43 3.4 JIVA, Output>>Outcomes>>Impact (as on 31 March 2024) 43 4.1 Promotion of RBICs as of 31 March 2024 57 4.2 Progress of marketing initiatives 58 5.1 NABARD-managed infrastructure funds for rural India as on 31 March 2024 (₹ crore) 64 5.2 Performance of RIDF as on 31 March 2024 65 5.3 Outputs and outcomes under RIDF as on 31 March 2024 66 5.4 Performance of the LTIF 69 5.5 Performance of MIF as on 31 March 2024 69 5.6 Performance of NIDA as on 31 March 2024 70 5.7 Expected outcomes of projects funded under NIDA 71 5.8 Sanctions and disbursements under WIF as on 31 March 2024 (₹ crore) 72 5.9 Region-wise performance of WIF as on 31 March 2024 73 xv  Contents 5.10 Output under WIF as on 31 March 2024 73 5.11 NABARD-supported food processing infrastructure as on 31 March 2024 74 5.12 Performance of DIDF as on 31 March 2024 76 5.13 Performance of FIDF as on 31 March 2024 76 6.1 Agricultural GLC by agency during FY2024 (provisional data) (₹ lakh crore) 81 6.2 Long- and short-term refinance support (₹ crore) 82 6.3 Disbursement of short-term refinance by agency (₹ crore) 82 6.4 Disbursement and share of short-term refinance by region (₹crore) 83 6.5 Disbursement of long-term refinance by agency (₹ crore) 84 6.6 Disbursement and share of long-term refinance by region (₹crore) 84 6.7 Performance of special refinance schemes in FY2024 85 6.8 Performance of other credit products in FY2024 86 6.9 Activities supported by FIF 91 7.1 Structure of rural financial institutions 98 7.2 Supervision by NABARD in FY2024 99 7.3 Advantages of SuperSoft 2.0 100 A7.1 Compliance status of supervised entities as on 31 March 2023 105 A7.2 Number of banks by performance indicator as on 31 March (of the relevant year) 106 A7.3 Number of banks by ratings as on 31 March (of the relevant year) 107 8.1 Long-term cooperative structure 111 8.2 Regional rural banks as on 31 March 2024 113 8.3 Improvement in performance of RRBs 115 8.4 RRBs offering different digital services (number) 116 9.1 Staff composition as on 31 March 2024 124 9.2 Training outputs in FY2024 125 10.1 Sources of funds 141 10.2 Uses of funds 143 10.3 Shoring up GLC through refinance: Status as on 31 March 2024 144 10.4 Social sector investments as on 31 March 2024 144 10.5 Infrastructure finance as on 31 March 2024 145 10.6 Investment of surplus funds as on 31 March 2024 145 10.7 Income analysis 146 10.8 Shareholding in subsidiaries of NABARD (₹ crore) 147 BA10.1 PACS warehouses by state under WLGSP 154 BOXES 1.1 Highlights of the Union Budget 2024–25 17 3.1 Credit flow in watershed development projects 40 3.2 Impact evaluation study—KfW Soil Phase II 40 xvi  Contents 3.3 Impact evaluation of TDF project in Wayanad, Kerala 46 5.1 RIDF-supported social sector projects: Impact evaluation by IIT Kharagpur 68 6.1 Increasing KCC penetration 88 7.1 Enhanced CAMELSC 100 7.2 Agenda of interaction with the FATF Mutual Evaluation Assessment Team in New Delhi 101 9.1 Basel III implementation 127 9.2 Vigilance Awareness Week 129 9.3 Launch of DIGI-DAK 131 9.4 Unveiling the New NABARD for Tomorrow’s India (UNNATI) 135 A10.1 NABCONS pilots the construction of warehouses under WLGSP 154 SHOWCASES 2.1 Dairy cooperatives—a successful endeavour 25 3.1 Building resilience through water harvesting 37 3.2 Crop production using low-cost poly house 41 3.3 Sowing success through an integrated farming system 44 3.4 From hardship to hope: Crop diversification and irrigation solutions 45 4.1 Women oilseed farmers gain from FPO in Haryana 53 4.2 Applying internet of things and machine learning for climate-resilient and sustainable agriculture 55 4.3 Reviving Cheriyal Art 56 4.4 Threads of heritage 57 4.5 Shree Ann Mart in Alwar, Rajasthan 59 5.1 Augmenting irrigation facilities in rainfed regions of Bundelkhand 67 5.2 Time-controlled automated sprinkler irrigation system for greenhouse cultivation 68 5.3 Narmada–Kshipra Link Multipurpose Project 71 5.4 Unveiling a mega food park in Himachal Pradesh 74 5.5 Construction of fishing harbour at Tharangambadi in Mayiladuthurai District, Tamil Nadu 77 6.1 Promoting ‘Cooperation among Cooperatives’ 92 6.2 Paradigm shift through financial literacy, Bihar 94 10.1 Maiden issue of social bond by NABARD 140 A10.1 From vision to venture: NABFINS-backed entrepreneurs propel growth 151 A10.2 Micro loans, macro change 153 xvii  ABBREVIATIONS AA Account Aggregator ARDB Agriculture and Rural Development Bank BC Business Correspondent BIRD Bankers Institute of Rural Development CBS Core Banking Solutions CSC Common Service Centre DCCB District Central Cooperative Bank EA Enterprise Architecture FPO Farmer Producers’ Organisations GeM Government e-Marketplace GLC Ground-Level Credit GOI Government of India NBFC Non-Banking Financial Company NER North East Region NRC National Rural Credit PACS Primary Agricultural Credit Societies RFI Rural Financial Institution RIDF Rural Infrastructure Development Fund RO Regional Office RRB Regional Rural Bank SCARDB State Cooperative Agriculture and Rural Development Bank SCB Scheduled Commercial Bank SHG Self-Help Group StCB State Cooperative Bank UT Union Territory xviii  ANNUAL REPORT 2023–24 National Bank for Agriculture and Rural Development  1 1.1 Global macro-financial conditions 1.2 Domestic macroeconomic developments 1.3 Resilience of agriculture to uneven rainfall patterns 1.4 Momentum gained in rural economic activity 1.5 The economic outlook Appendix to Chapter 1 India and the World The Economy in FY2024  Annual Report 2023–2­4 T India’s growth he global economy made a soft landing in FY2024 as inflation moderation was accompanied momentum by steady growth.1 Global recession, anticipated as a consequence of aggressive monetary surpassed tightening by systemically important central banks, was avoided, with a decline in global food expectations amid and commodity prices and further easing of supply chain disruptions. The global macroeconomic growth supportive environment, nevertheless, remained afflicted by the lingering effects of geo-economic fragmentation, macro-financial high debt levels, and rising risks from climate events, dampening the near- to medium-term growth conditions of moderation outlook relative to the pre-COVID-19 pandemic trend. in inflation, a The Indian economy exhibited remarkable resilience to global shocks and recorded robust growth sustainable external balance during FY2024. Its realised growth momentum surpassed expectations amid growth supportive position, financial macro-financial conditions characterised by moderation in inflation, a sustainable external balance stability, healthy position, financial stability, healthy balance sheets of corporates, orderly financial markets, and corporate fiscal consolidation along with sustained improvement in the quality of public expenditure. On the balance sheets, back of continuous reforms, the investment-led growth process and sound macro-policy setting are orderly financial expected to help sustain India’s lead as the fastest growing major economy in the world. markets, and fiscal consolidation along with sustained 1.1 GLOBAL MACRO-FINANCIAL CONDITIONS improvement in the quality of public The global growth momentum displayed greater-than-expected resilience to high interest rates expenditure. that persisted throughout the year with central banks sustaining their policy focus on managing the cost-of-living crisis. Supply side expansion, following the easing of supply chain pressures, improved labour force participation, and sustained decline in global food prices imparted resilience. Consequently, the feared global recession, that usually ensues an aggressive phase of synchronised global monetary tightening, was avoided. Global growth at 3.3% in 2023 reflected only a modest deceleration from the 3.5% growth recorded in 2022 (Table 1.1). Global headline inflation continued to soften during the year from the peak attained in 2022, but hovered above respective inflation targets of central banks, thereby making the last mile of disinflation a difficult challenge for them. Market expectations surrounding the beginning of the easing cycle of monetary policy and the associated perceptions about future interest rate trajectories impacted financial markets, keeping yields and term premia volatile. Inflation is projected by the International Monetary Fund (IMF) to fall considerably in advanced economies in 2024 while remaining sticky in emerging and developing economies (Table 1.1). Decline in commodity prices, both oil and non-oil, that materialised during 2023 after the surge in 2022 is projected to reverse marginally in 2024. Global merchandise trade contracted by 1.2% in 2023; trade in goods and services (taken together) also registered a tepid growth of 0.8%.2 According to the IMF, about 3,200 and 3,000 new restrictions were imposed by countries on trade in 2022 and 2023, respectively. According to UNCTAD, foreign direct investment to developing economies declined by 9% in 2023.3 The trade and investment channels of growth, thus, remained subdued, partly reflecting the impact of geo- economic fragmentation. 4  India and the World: The Economy in FY2024 Table 1.1: Global economic indicators (year-on-year growth %) Particulars 2022 2023 2024 World output 3.5 3.3 3.2 Advanced economies (AEs) 2.6 1.7 1.7 Emerging market and developing economies (EMDEs) 4.1 4.4 4.3 World trade volume (goods and services) 5.6 0.8 3.1 World trade volume (goods) 3.0 -1.2 2.6 World consumer prices 8.7 6.7 5.9 AEs 7.3 4.6 2.7 EMDEs 9.8 8.3 8.2 Commodity prices Oil 39.2 -16.4 0.8 Non-oil 7.9 -5.7 5.0 Sources: IMF (2024), World Economic Outlook, July 2024, International Monetary Fund, Washington, D.C. https://www.imf.org/en/ Publications/WEO/Issues/2024/07/16/world-economic-outlook-update-july-2024. World trade volume (goods): WTO (2024) Global Trade Outlook and Statistics, April 2024, World Trade Organization, Geneva, Switzerland. https://www.wto.org/english/res_e/booksp_e/trade_outlook24_e.pdf. 1.2 DOMESTIC MACROECONOMIC DEVELOPMENTS 1.2.1 Robust growth with macro stability India’s growth momentum accelerated further in FY2024, with 7% or higher growth recorded for the third consecutive year, notwithstanding formidable headwinds from the global economy (Figure 1.1). As indicators of economic activity progressively suggested further strengthening of Figure 1.1: Growth trend of India’s GDP at 2011–12 prices (%) 9.7 8.2 7.0 3.9 FY2020 FY2021 FY2022 FY2023 FY2024 (SRE) (FRE) (PE) -5.8 FRE = First Revised Estimate, GDP = Gross Domestic Product, PE = Provisional Estimate, SRE = Second Revised Estimate. Source: GOI (2024), Provisional Estimates of Annual GDP for 2023-24 and Quarterly Estimates of GDP for Q4 of 2023-24, National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India. https://www.mospi.gov.in/sites/default/files/press_release/PressNoteGDP31052024.pdf. 5  Annual Report 2023–2­4 Average inflation growth momentum during the course of the year, growth in gross domestic product (GDP) for FY2024 declined to was revised up from 7.3% (as per first advance estimates) to 7.6% (as per second advance estimates), 5.4% in FY2024 and further to 8.2% (as per provisional estimates). The acceleration in growth momentum was led reflecting proactive by robust (9%) growth in investment (i.e., increase in gross fixed capital formation) in FY2024, on monetary policy the back of sustained thrust of fiscal policy on capital expenditure. Among the major constituent tightening and targeted supply- sectors of the economy, construction and manufacturing registered high growth at 9.9% each.4 side measures undertaken by the government. 1.2.2 Inflation moderated following proactive monetary and supply management measures Average consumer price index (CPI) inflation had surged to 6.7% in FY2023, to above the upper tolerance band of the inflation target, as global food and energy prices escalated due to the supply disruptions in the wake of the Russia–Ukraine War (Figure 1.2). However, average inflation declined to 5.4% in FY2024 and core (excluding food and fuel) inflation dropped below 4% during the last 4 months of the year reflecting: 5 proactive monetary policy tightening, in the form of a cumulative increase in policy repo rate by 250 basis points (between May 2022 and February 2023), which was sustained thereafter during FY2024 and beyond; and targeted supply-side measures undertaken by the government, in the form of ◊ placing export restrictions to improve domestic availability, ◊ excise duty cuts on petrol and diesel, ◊ market release of foodgrains from buffer stocks, ◊ lowering of tariffs to soften the cost of certain imported food items, and ◊ imposing restrictions on the use of sugarcane molasses for ethanol production, etc. Figure 1.2: Consumer price index inflation in India, annual average (%) 6.7 6.2 5.5 5.4 4.8 FY2020 FY2021 FY2022 FY2023 FY2024 Sources: GOI (various years), Central Statistical Office, Ministry of Statistics and Programme Implementation, Government of India. RBI (2024), Monetary Policy Statements (2023–24), Reserve Bank of India, Mumbai. 1.2.3 Fiscal consolidation and higher public sector capex to foster growth with macro stability Reflecting the needed fiscal policy response to manage the severe macroeconomic impact of the pandemic, the gross fiscal deficit (GFD) of the central government had jumped to 9.2% of GDP in FY2021 (and the consolidated fiscal deficit of the centre and states to 13.3% of GDP). Since then, the fiscal policy stance has persevered with gradual consolidation along with higher allocations for 6  India and the World: The Economy in FY2024 Figure 1.3: Fiscal deficit and capital expenditure as a percentage of GDP (a) Gross fiscal deficit (b) Capital expenditure 9.2 3.4 6.7 3.2 6.4 5.6 2.7 2.5 4.6 4.9 2.2 1.7 E) E) 23 22 21 24 20 23 22 21 20 24 (B (B 20 20 20 20 20 20 20 20 20 20 5 25 FY FY FY FY FY FY FY FY FY FY 02 20 2 FY FY BE = Budget estimates, GDP = Gross Domestic Product. Source: Union Budgets, Ministry of Finance, Government of India. capital expenditure (capex), thereby promoting non-inflationary growth. As per the interim budget for FY2025, the GFD (provisional estimates) for FY2024 at 5.6% of GDP is placed lower than the budget estimate of 5.9%, and the budgeted GFD for FY2025 at 4.9% is set lower than market expectations. The commitment to lowering GFD to lower than 4.5% of GDP by FY2026 has also been reiterated. Sustaining the thrust on capex to drive the post-pandemic recovery and accelerate growth momentum, the share of capex has been budgeted higher at 3.4% of GDP in FY2025 (Figure 1.3 a and b). With GFD of states moderating from 4.1% of GDP in FY2021 to 3.1% of GDP in FY2024 (as per budget estimates), the consolidated deficit has also declined to 8.7% of GDP.6 1.2.4 External balance position remains sustainable In an unfavourable global environment, characterised by tepid growth in world trade and heightened spill-over risks from tight monetary policy stance of advanced economies, India’s external vulnerabilities remained contained, with current account deficit (as a percentage of GDP) Figure 1.4: Current account deficit as a percentage of GDP 0.9 FY2020 FY2021 FY2022 FY2023 FY2024 -0.9 -1.2 -0.7 -2.0 GDP = Gross Domestic Product. Source: Database on Indian Economy, Reserve Bank of India. https://cimsdbie.rbi.org.in/DBIE/#/dbie/home. 7  Annual Report 2023–2­4 With rising narrowing and staying within sustainable levels on the back of lower trade deficit than last year resilience of Indian and higher receipts through services exports and remittances, and a turnaround in portfolio flows agriculture to (Figure 1.4). In January–March 2024, the current account in the balance of payments recorded a climatic shocks, surplus equivalent to 0.6% of GDP. India’s foreign exchange reserves rose to $646.4 billion by the the farm sector end of FY2024.7 gross value added continues to exhibit sustained expansion over 1.3 RESILIENCE OF AGRICULTURE TO UNEVEN RAINFALL PATTERNS successive years. The Southwest monsoon rainfall ended the year with a 5.6% deficit (compared with the long period average rainfall), and the distribution of rainfall was also erratic, with June and August of 2023 experiencing large deficits and July and September of 2023 encountering surpluses.8 The geographical distribution was also uneven, with east and north-east and the southern peninsula witnessing larger deficits. Reflecting the expected impact of unfavourable rainfall patterns on kharif output, the first advance estimates of kharif foodgrains production were set 0.9% lower for FY2024 (over the first advance estimates of the previous year). Growth in agricultural gross value added (GVA) (at 2011–12 prices) was also pegged lower at 1.8% (as per the first advance estimates of national income) and 0.7% (as per the second advance estimates of national income). According to the India Meteorological Department, rainfall was 9% below normal during October–December 2023 and 33% below normal during January–February 2024. The reservoir levels, as a result, remained low over successive weeks of the rabi cropping season, posing concerns about rabi output. Foodgrains production (kharif and rabi combined), however, exhibited resilience and is estimated at 328.9 million tonnes for AY2024 (as per third advance estimates), similar to the level recorded in AY2023 (Figure 1.6).9 Horticulture output in FY2024 (as per second advance estimates) at 352.2 million tonnes shows a modest decline from 355.5 million tonnes achieved in the preceding year. In the provisional estimates of national income, agricultural GVA growth was revised to 1.4% (Figure 1.5). With rising resilience of Indian agriculture to climatic shocks, the farm sector GVA nevertheless continues to exhibit sustained expansion over successive years. Figure 1.5: Agriculture and allied sector GVA growth at 2011–12 prices (%) 6.2 4.7 Decadal average 4.1 (FY2014 to FY2024) 3.9 3.5 2.1 1.4 FY2019 FY2020 FY2021 FY2022 FY2023 (FRE) FY2024 (PE) FRE = First Revised Estimates, GVA = Gross Value Added, PE = Provisional Estimates. Sources: Central Statistical Organisation, Ministry of Statistics and Programme Implementation, Government of India. For FY2023 and FY2024: PIB (2024), Provisional Estimates of Annual GDP for 2023-24 and Quarterly Estimates of GDP for Q4 of 2023-24, Press Information Bureau, press release by Ministry of Statistics and Programme Implementation, Government of India, 31 May. https://pib.gov.in/PressReleaseIframePage. aspx?PRID=2022323. 8  India and the World: The Economy in FY2024 Figure 1.6: Foodgrain production in India (million tonne) 330 329 311 316 285 298 26 24 275 285 27 23 25 252 252 25 22 23 17 16 304 304 288 285 274 263 260 252 235 235 AY2015 AY2016 AY2017 AY2018 AY2019 AY2020 AY2021 AY2022 AY2023 AY2024 (TAE) (SAE) Cereals Pulses Foodgrains AY = Agriculture year, SAE = Second Advance Estimate, TAE = Third Advance Estimate. Source: Department of Agriculture & Farmers Welfare, Ministry of Agriculture & Farmers Welfare, Government of India. 1.3.1 Decline in share of food in household consumption basket The consumption expenditure survey (CES) results relating to the period August 2022–July 2023, released after a gap of 11 years, showed a distinct shift in the consumption pattern of households, in both rural and urban areas, with the share of food, and cereals in particular, declining in total monthly per capita consumption expenditure (MPCE) (Table 1.2). At the aggregate level, as per capita income rises over time, the expectation that the share of food in the consumption basket will decline, and within food, there will be a reallocation away from cereals in favour of processed food and more protein items such as milk and dairy products, is corroborated by the CES. Noticeable decline in the shares of cereals and sugar, two water-guzzling food items, in both rural and urban areas coincide with a period when water stress is reported to have increased in India. Notwithstanding the desirable shift in the consumption pattern, water-conserving agricultural practices need to be promoted to further enhance the resilience of Indian agriculture to climatic shocks. The changing consumption pattern also provides leads in terms of reallocation of resources, including credit that may be required to promote the production of food items, the demand for which is expected to rise going ahead. Table 1.2: Share of cereals/food as a percentage of average MPCE Rural Urban Period Cereals Food Cereals Food FY2000 22.2 59.4 12.4 48.1 Water-conserving agricultural FY2005 17.5 53.1 9.6 40.5 practices must FY2010 13.8 57.0 8.2 44.4 be promoted FY2012 10.8 52.9 6.7 42.6 to enhance the FY2023 4.9 46.4 3.6 39.2 resilience of Indian agriculture to MPCE = Monthly Per capita Consumption Expenditure. climatic shocks. Source: National Sample Survey Office, Ministry of Statistics and Programme Implementation, Government of India. 9  Annual Report 2023–2­4 In recent years, 1.3.2 Strong credit flow to agriculture the annual flow of credit to agriculture Agriculture, as a priority sector, receives targeted annual flow of credit, and in recent years, actual has consistently flow has generally exceeded the set targets (Figure 1.7). Credit flow to agriculture (from commercial exceeded targets. banks, regional rural banks, and cooperatives taken together) registered a growth of 13.6% during FY2024, which was higher than the nominal growth in agricultural GVA at 5.4%. The Kisan Credit Card (KCC) scheme has played a pivotal role in providing timely credit to farmers, with over 7.4 crore operative KCC accounts involving a total outstanding credit of ₹8.9 lakh crore as on 30 June 2023.10 Figure 1.7: Annual flow of credit to agriculture 30 130 126 25 25 125 Target and achievement in  lakh crore 22 Achievement as a % of target 20 20 120 118 19 19 17 116 16 116 15 15 114 115 14 14 13 113 12 11 11 10 10 110 9 9 8 8 9 108 106 5 105 105 103 0 100 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Annual target Achievement Achievement as % of t arget Sources: RBI (various years), Database on Indian Economy, Reserve Bank of India, Mumbai. National Bank for Agriculture and Rural Development. 1.3.3 Agricultural exports sustained despite curbs India’s annual agricultural exports have hovered around $50 billion since FY2022 (Figure 1.8). The export basket, nevertheless, remains highly concentrated (with high shares of rice, including basmati rice, and sugar together accounting for more than one third of total exports). Despite curbs imposed on rice and sugar exports aimed at improving domestic availability to contain price pressures, total agricultural exports during FY2024 at $48.8 billion were only modestly lower than in FY2023. 10  India and the World: The Economy in FY2024 Figure 1.8: Agricultural exports ($ billion) 53.1 50.2 48.8 41.2 38.5 35.1 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Source: Agricultural and Processed Food Products Export Development Authority, Government of India. 1.3.4 New initiatives for a more efficient agri-supply chain With a view to strengthening the agricultural supply chain, which could help increase farmers’ income and contain food inflation volatility, several new initiatives were launched and promoted by the Government of India. The World’s Largest decentralised Grain Storage Plan (WLGSP) in the cooperative sector was launched during the year, to reduce post-harvest losses, prevent distress sale of crops by farmers, and enable them to get better prices later. With primary agricultural credit societies (PACS) operating as procurement centres as well as source of supply to fair price shops, farmers may also expect to save on transportation costs. As per the Ministry of Cooperation, a target to establish 2 lakh new multipurpose PACS/dairy/ fisheries primary cooperative societies in the next 5 years11 has been set, along with the ongoing ambitious programme of PACS computerisation. Steps are being taken to diversify the businesses of PACS into areas such as retail distribution of gas/petrol, custom hiring centres, fair price shops, godowns, etc. Also, three new multi-state cooperative societies have been approved to be set up at the national level for exports, certified seeds, and organic products. As on 31 March 2024, 17.7 crore households have been saving linked through over 144 lakh self- help groups (SHGs) with deposits of over ₹65,089.2 crore and loan outstanding of ₹2.6 lakh crore.12 The Ministry of Rural Development has launched a programme called ‘Lakhpati Didis’ to enable women SHG members to generate an annual household income exceeding ₹1 lakh on a sustainable basis. Earlier, the Government of India had launched a central sector scheme for the ‘Formation and Promotion of 10,000 Farmer Producers’ Organisations (FPOs)’, recognising that FPOs enhance the bargaining power of farmers through collectivisation, improve access to inputs and fetch more The WLGSP will remunerative prices for the produce, and thereby raise the income of farmers. Till date, 7,355 FPOs reduce post- harvest losses, have been sanctioned out of which 6,056 have been registered across the country. These FPOs are prevent distress engaged in supplying quality inputs, making available machinery and equipment on custom hiring sale of crops, and basis for members, and undertaking value addition like cleaning, assaying, sorting, grading, and improve price processing of agricultural produce.13 All these initiatives are expected to deepen financial inclusion, realisation by create new livelihood opportunities, boost income, and expand access to agri-tech solutions. farmers. 11  Annual Report 2023–2­4 The government Agri start-ups are driving technology-led transformative changes in the agriculture sector, and has initiated many recognising their significance, the policy environment has been proactively made conducive for technology-led them. As of December 2023, there were over 6,000 agriculture start-ups recognised across 590 interventions districts by the Department for Promotion of Industry and Internal Trade.14 There is a need for in agriculture large-scale engagement of the private sector in solving both persisting and emerging issues in the including the National Pest agricultural sector. Many start-ups are trying to develop cost-effective and multi-purpose drones Surveillance that can be used for scouting the field in less time and capturing precise data to generate prescription System, Namo maps and plans and assess crop damage following a natural disaster. Similarly, portable cold storage Drone Didi, and Agri devices are being explored to reduce the wastage of horticulture and dairy products which have low Stack architecture shelf life. Many start-ups are working on finding cost-effective solutions to the problem of crop to enable initiation residue burning which leads to pollution. Several innovative products are in their nascent phase of data-driven of development and need handholding from investors and governments to enable them to have solutions. successful testing and then scale up to generate the desirable positive impact on the economy. Many technology-led interventions have also been made by the government, which include an artificial intelligence and machine learning-based National Pest Surveillance System to tackle potential loss of produce due to reasons such as pest attacks or unexpected changes in the weather pattern; the Namo Drone Didi scheme to train rural women as drone pilots for spraying fertilisers and pesticides in the fields in a sustainable manner; and an Agri Stack architecture to enable initiation of data- driven solutions by various stakeholders. 1.4 MOMENTUM GAINED IN RURAL ECONOMIC ACTIVITY For securing a robust, broad-based, and inclusive growth process, the performance of the rural economy becomes critical as 65% of India’s population resides in rural areas.15 In the post-pandemic period, rural economic indicators point to sustained strengthening of growth momentum during FY2024. Figure 1.9: Trends in urban and rural MPCE 7,000 58.4 59 Rural MPCE as % of urban MPCE 6,000 56.8 57 6,459 5,000 MPCE in  4,000 54.4 55 53.1 3,000 52.4 53 3,773 2,630 1,054 2,000 855 51 1,984 579 486 1,105 1,430 1,000 0 49 FY2000 FY2005 FY2010 FY2012 FY2023 Rural Urban Rural as % of Urban MPCE = Monthly Per capita Consumption Expenditure. Source: GOI (various years), Household Consumption Expenditure Survey (2022–23), National Sample Survey Office, Ministry of Statistics and Programme Implementation, Government of India. 12  India and the World: The Economy in FY2024 1.4.1 Narrowing of rural–urban consumption gap Change in MPCE over time is a key indicator of economic performance. As per the household CES for FY2023, the gap in MPCE between rural and urban areas has narrowed, with rural expenditure at 58.4% of urban expenditure, up from 54.4% in FY2012 (Figure 1.9). Moreover, rural expenditure registered a CAGR of 9.2% as against 8.5% for the urban households.16 1.4.2 Decline in rural unemployment rate Unemployment is another major indicator to assess the state of the rural economy. As per the annual Periodic Labour Force Survey (PLFS), unemployment rate in rural areas at 2.4% in FY2023 was lower than in urban areas at 5.4%, and unemployment has also consistently declined in both rural and urban areas since FY2018 (Figure 1.10). Importantly, this decline has occurred against the backdrop of a sustained increase in labour force participation rate (LFPR), i.e., an increase in the percentage of persons in labour force (working, or seeking work, or available for work) in the population (Figure 1.10). Figure 1.10: Unemployment rates (%) and labour force participation rates (%) (FY2018–FY2023) (a) Unemployment rate (%) (b) LFPR (%) 7.7 7.6 57.5 60.8 55.5 57.4 6.9 6.7 51.5 6.3 50.7 5.3 5.4 49.1 49.7 50.4 5 47.6 47.5 49.3 3.9 3.3 3.2 2.4 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Rural Urban Rural Urban LFPR = Labour Force Participation Rate. Source: GOI (various years), Periodic Labour Force Survey, National Sample Survey Office, Ministry of Statistics and Programme Implementation, Government of India. 1.4.3 High-frequency indicators of rural activity strengthened Several high-frequency (monthly) indicators help in assessing the state of the rural economy, such as scooter sales, fertiliser and tractor sales, agricultural and non-agricultural employment, agricultural exports, bank credit flows to agriculture, demand for work under the Mahatma Gandhi The rural–urban National Rural Employment Guarantee Act (MGNREGA), rural wages, terms of trade (i.e., the ratio consumption gap of food prices to non-food prices, as sourced from the wholesale price index), reservoir level (which has narrowed, rural could impact crop prospects), and rural sentiments.17 To enhance comparability of indicators, all unemployment nominal indicators (like agri exports, agri credit and rural wages) are deflated by CPI-rural inflation. gone down, and high frequency Recognising the strong influence of seasonality in these indicators, the average values of these indicators of rural indicators over the 12-month period during FY2024 can be compared against the corresponding economic activity values for FY2023 for a reasonable assessment of the performance of the rural economy relative to improved in recent the previous year. Such a comparison shows that most of the indicators expanded, but for reservoir years. 13  Annual Report 2023–2­4 levels, real agri-exports, fertilisers, and tractors (Figure 1.11). Overall, therefore, expansion in rural activity appears to have gained momentum during FY2024. Figure 1.11: Rural activity indicators (change in FY2024 monthly averages over FY2023 monthly averages)  Real rural wages 0.6 Real credit 12.0 -13.4 Real exports Terms of trade 8.2 Employment (non-agri) 16.9 Employment (agri) 3.2 Consumer sentiment 28.8 MGNREGA 0.3 -16.1 Reservoir level IIP (food) 1.6 -1.2 Fertiliser -8.3 Tractors Scooters 12.5 -20 -15 -10 -5 0 5 10 15 20 25 30 Percent IIP = Index of Industrial Production, MGNREGA = Mahatma Gandhi National Rural Employment Guarantee Act. Source: Database on Indian Economy, Reserve Bank of India; Labour Bureau, Ministry of Labour and Employment, Government of India; and Centre for Monitoring Indian Economy. 1.4.4 Multipronged policy interventions drive impressive rural development outcomes The rural economy has seen a transformation benefitting from the multipronged approach to development being pursued by the government, covering universal food security, housing, drinking water, electricity, cooking gas, bank accounts, and financial services. As announced in the Interim Budget, 2024–25, with the Pradhan Mantri (PM) Awaas Yojana (Gramin) nearing the goal of achieving the target of 3 crore houses, 2 crore more houses will be taken up in the next 5 years.