The World Bank approved two credits for a total of US$200 million for the National Agricultural Innovation Project. It is designed to assist the Government of India transform the agriculture sector from being primarily focused on food self-sufficiency to a more market-oriented approach in support of poverty alleviation and income generation.

 

In the last ten years the Indian agriculture sector has undergone considerable changes. National food self-sufficiency has been achieved and the market demand for products such as fruits, vegetables, meat, eggs, fish, milk, sugar, and edible oils has increased and is encouraging diversification of production. While agricultural development has long been supply oriented, its future will be more market driven.

 

At the same time, analyses show that with the limited scope for area expansion, enhanced productivity, profitability, and competitiveness will be the main sources of future agricultural growth. The challenge for Indian agriculture now becomes to increase profitability, competitiveness, and income earning capacity in a market driven system.

 

“Over 200 million poor people in rural India depend upon agriculture for their livelihoods,” said Michael Carter, World Bank Country Director for India. “In order to generate additional income and employment for these rural poor, market-driven agricultural development is critical. It will help increase producer incomes, employment opportunities and wages, and ultimately reduce poverty.”

 

The project will support the development and implementation of agricultural innovations through collaboration among farmers, private sector, civil society, and public sector organizations. The project responds to the goals addressed in India’s National Policy on Agriculture (NPA) and the Tenth Five-Year Plan, which place high priority on raising agricultural productivity as a means to achieve agricultural growth and reduce rural poverty.

 

The project is designed around the following four components:

 

• ICAR as the catalyzing agent for management of change in the Indian National Agricultural Research System (NARS):ICAR has to provide leadership and empower the NARS and the expanding group of other research providers to adapt to emerging challenges.
  
  
• Research on production to consumption systems:The specific objective of this component is to establish market-oriented collaborative research alliances for sustainable improvement of selected agricultural production to consumption systems, in recognition of the growing importance of the market.
  
  Research on sustainable rural livelihood security:The core objective of this component is the sustained improvement in the incomes and well-being of farm families which have been left behind in development, in recognition of the persisting poverty in parts of the country and in recognition of  natural resource management problems
  
  
• Basic and strategic research in the frontier areas of agricultural science: The objective is to strengthen the competence of the Indian NARS in the forefront of science, in recognition of the need to develop capacity for solving the problems of tomorrow and the need to be a global leader in the field of agricultural research. 

The credits from the International Development Association (IDA), the World Bank's concessionary arm, have 40 years to maturity with a 10-year grace period.  One of the credits (for $140 million) carries a 3 percent annual interest rate; the other (for $60 million) carries a service charge of 0.75 percent per annum.