slow down in expansion of areas under irrigation. dwindling public sector control support for critical extension related activities and programme for land development and soil conservation are major gaps that need urgent redressal. these disparities in rural infrastructure too need to be addressed. 11. one significant component of rural finance is the value chain finance. it derives its significance from the fact that there are about 140 million farming households of which more than 80 per cent are small and marginal farmers. linking these farmers to formal financial services is a significant challenge. if agriculture has to support investment for the small and marginal farmers, promoting agri - business through development of value chains looks very promising. promoting agricultural value chains will bring about better market opportunities, technology adoption, private investments and reforms that would increase their access to finance besides significant positive impact on end - consumers in terms of reasonable prices of products. new generation private sector banks and foreign banks who have now priority sector obligations contribute a lot in this regard. nabard has in the recent past, conducted some ground level studies to understand the supply chain management issues related to onion, potato & tomato and is now according priority to warehouse funding and creation of cold storage capacities in the country, besides providing negotiable warehouse receipts to the farmers which, in turn, will prevent distress sale of farm produce by the farmers. 12. it is widely recognised that commercial interests of small - scale producers are best bridged by producer organisations including co - operatives and their federations. realising idfc rural development network ( 2013 ), india rural development report 2012 – 13. delhi : orient blackswan. bis central bankers ’ speeches the importance of collective investments in productive assets, government of india has set up equity grant fund for providing matching assistance and credit guarantee fund ( with 85 per cent default guarantee cover ) for financing farmer producer companies. the reserve bank has also included financing producer companies under the ambit of priority sectors. further, nabard has also constituted a producer organisation development fund with a corpus of ₹ 500 million for financing producer companies. need of the hour is to scaleup the operations of the producer organizations. hassle - free financial services to the rural sector 13. since independence, expanding the outreach of financial services to the poor has been at the centre of the poverty alleviation policy in india. the successive surveys of the national sample survey organisation ( nsso ) { all - india debt and investment surveys ( aidis ) } document a steady rise in the importance of banks as a source

2 4. 9 4. 8 4. 4 4. 5 amount ( ₹ billion ) 2006 – 07 2007 – 08 2008 – 09 2009 – 10 2010 – 11 2011 – 12 2012 – 13p loans disbursed loans outstanding { source : nabard } 20. the major issues confronting the shgs include inadequate number of quality agencies required for capacity building and hand - holding, governance and leadership challenges, lack of management information systems, inconsistent reporting, supervision and management capacities, excessive dependence on promoter agencies for essential services, skewed distribution of shgs across the regions, decline of banking sector ’ s involvement in the programme with primacy being attached to financial inclusion programmes which have almost excluded shgs from their focus, increasing incidence of npas, etc. the new challenges for shgs are how do they move up in the value chain to livelihood activities leading to sustained income generation supported by different backward and forward linkages. therefore, the focus needs to shift towards consolidation of shgs by addressing these deficiencies. in order to overcome the fatigue of the sblp and as part of its poverty alleviation strategy, nabard has taken various initiatives like shg - 2, joint liability groups ( jlg ) and producer organization related initiatives. it aims to cover all eligible poor rural households in the country through sblp by march 2017 and promote 2 million new shgs during 2013 – 17. there is also a strategic shift from state / district - based planning for sblp to block - based planning to address the issue of intra - district imbalances in promotion of shgs. there has also been a focus on convergence of sblp with financial inclusion initiatives of the reserve bank and government programmes like the national rural livelihood mission ( nrlm ) to maximise benefits to the shg members. in respect of the latter, it is important to underscore that government sponsored initiatives should not crowd out agencies already doing good work in the field as there is enough space for multiple stakeholders & shgs to function. focus on credit at the cost of savings should also not be over emphasized and distortions leading to misuse and abuse of the system through interest subvention also need to be avoided. concluding thoughts 21. it has been repeatedly recognized that majority of the people in rural areas depend on agriculture as a source of living though non - farm activities are gradually gaining significance in the rural economic development. it is also recognized that agriculture is more risky economically than industry and trade and, therefore, the