40-Sectoral Allocation of Groundwater and Its Pricing.

Abstract

As a result of two consecutive spells of severe droughts during 1965 to 1967, the National Development Council decided to reorient the focus of rural electrification to energisation of pumpsets for attaining self-sufficiency in food production rather than on mere electrification of villages by providing domestic connections and street lighting. The importance of the utilization of ground water through pumpset energisation became national phenomena to protect the crop from the vagaries of the monsoon. The All India Rural Credit Review Committee set up by the RBI for evolving financial strategies for promoting agricultural production has resulted in the setting up in 1969 of Rural Electrification Corporation (REC) and Agricultural Refinance Corporation (ARC) presently known as National Bank for Agriculture and Rural Development (NABARD). The role of Rural Electrification Corporation was to promote development oriented rural electrification schemes in the country with project oriented and area-based concepts. Thus, REC assumed the role of a developmental financing institution. Similarly, NABARD provided refinance to commercial banks and Land Development Banks (LDBs) for various agricultural development programmes in rural areas. To supplement the scarce Plan fund, the RBI working group recommended Special Project Agriculture (SPA) under priority sector lending for pumpset energisation through institutional funding by REC, banks and NABARD in equal ratio in 1978. The State Electricity Board (SEB) was to provide single window facility to individual farmer for obtaining service connections for electrical pumpset energisation. REC was given the role of coordinating the programme from project implementation stage to approval, sanction, completion of legal formalities, monitoring, scrutiny of schemes and closure of schemes. The finalization of banking plan was the responsibility of NABARD. With the withdrawal of NABARD from the programme in 1995, the Banking Plan responsibility had fallen on REC and SPA programme was funded directly in participation with banks under SPA-BP category of schemes. From 1998 onwards, REC started financing 100% funds for the SPA schemes.