these challenges that are holding back the sector from realising its full potential. 1 / 6 bis - central bankers'speeches low productivity firstly, india's agricultural productivity remains low compared to many crop - producing nations. this low yield - measured as the quantity of crop produced per unit of land - is due to various factors, including a lower rate of seed replacement2, inefficient fertiliser use and limited adoption of advanced technologies. predominance of small and marginal landholdings secondly, the overwhelming dominance of small and marginal landholdings creates its own set of challenges. this fragmented land structure negatively impacts the viability of farming. with lower marketable surplus and holding capacity, small farmers often have limited bargaining power, face higher transaction costs, and struggle with the marketing of their produce. these factors further hinder their ability to invest in new technologies or improve productivity. dependence on monsoons / rainfall thirdly, india's heavy reliance on rainfed agriculture is another critical challenge. approximately 45 per cent of the country's agricultural land remains dependent on rainfall, making farmers highly vulnerable to the unpredictable nature of the monsoon. this over - reliance on rainfed farming leads to inconsistent agricultural output, exposing farmers to significant risks. the challenge lies in optimising the use of existing water resources while expanding irrigation coverage. ensuring more predictable and stable agricultural output will require a focus on efficient water management, irrigation infrastructure, and climate - resilient farming practices. inadequate agricultural processing capacity fourthly, limited processing infrastructure poses a significant barrier to agricultural growth. without adequate processing and preservation facilities, a large portion of agricultural produce is lost post - harvest, reducing the overall supply and farmer incomes. low value addition means farmers often receive lower prices for their raw produce, missing out on the potential earnings from processed goods. additionally, the lack of processing capabilities hampers access to both domestic and international markets, limiting export opportunities and reducing the competitiveness of indian agricultural products globally. low level of farm mechanisation fifthly, the low level of farm mechanisation poses a significant obstacle to enhancing agricultural productivity in india. labour shortages during peak farming seasons, combined with demand for higher wages, further aggravate this issue, making it difficult for farmers to maintain optimal output. additionally, indian agriculture faces a demographic challenge, with the average age of farmers now at 50. 1 years, underscoring the need to attract younger generations to the sector. modern farming techniques and increased mechanisation will

swaminathan j : financing for sustainable agriculture keynote address by mr swaminathan j, deputy governor of the reserve bank of india, at the international research conference, hosted by the college of agricultural banking ( cab ), pune, 11 september 2024. * * * distinguished guests, dr r. c. agrawal, deputy director general, indian council for agricultural research ; dr sunil gorantiwar, former director of research, agricultural university, rahuri ; principal, cab ; senior officials from financial and academic institutions ; colleagues from rbi ; ladies and gentlemen. a very good morning to all of you. it gives me immense pleasure to address you all today at this international research conference on the topical subject " sustainable financing for food security and farm income - opportunities, challenges, and the way forward ". it is even more fulfilling when it is being done as part of the celebrations of the 90th year of rbi's inception. climate change and sustainability are two pressing issues that have captured global attention. in recent years, we have witnessed a surge in extreme weather events, including severe droughts, cloudbursts, flooding, landslides, receding coastlines, and the alarming melting of arctic ice and himalayan glaciers. wildfires have become more frequent and intense. tragically, the most vulnerable communities - those who have perhaps contributed the least to climate change - are bearing the brunt of its devastating impacts1. in this context, sustainable agriculture emerges as a crucial solution. sustainable agriculture refers to farming practices that meet today's food needs while preserving resources for future generations. this means adopting methods that protect the environment, reduce reliance on chemical inputs, use water and land efficiently, and ensure social and economic equity for farmers. looking ahead, achieving agricultural sustainability will be a key priority for all economies where agriculture is a major sector. this will involve transforming conventional farming practices into technology - driven systems, enhancing agricultural commodities'processing and preservation techniques, contributing to value addition at the farm level. we also need to align crop production systems with climate - smart agriculture. and there is a need to ensure adequate and timely finance as well to sustain all of these. challenges faced by indian agricultural sector in the indian context, agriculture is not just an economic activity ; it is the foundation of our nation's food security and livelihood. the sector employs a significant portion of our population. yet, despite its critical importance, indian agriculture continues to face several structural challenges. let me briefly elaborate on some of