1

Role of Banking Sector in the Development

Of the Indian Economy
In the context of (Agriculture and Textile)
Industry in last 5 years)


Submitted to:
N.R. Institute of business administration
Ahmedabad- 380006
2013-2014

Submitted by:

YOGESH YADAV










2

N.R. Institute of Business Administration
GLS Campus, Mardia Plaza Lane, off, C.G. Road, Ellis bridge, Ahmedabad-


Certificate for Submission of Project Report
This is to certify that report submitted by the under mentioned students is in partial
fulfilment of the requirement for the completion of "Practical Studies" at the T.Y.B.B.A Semester 6
for the year 2013-2014.
Title of the Project: Role of banking sector in the development of the Indian Economy in the
context of (Agriculture and Textile Industry in last 5 years)






Director Project Guide External
examiner

Date:


Submitted by:

Name: Roll No:

YOGESH YADAV 74









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ACKNOWLEDGEMENT

This is really a matter of pleasure for us to prepare a project report as it was included in our
course by the GUJARAT UNIVERSITY. It gave us the opportunity to learn things practically what
we learnt enterprise and their impact on the working of the company.

We express our sincere gratitude tour faculty guide Prof. ------------- of our institute and also
thankful to our Director Dr. ----------- for her able guidance, continuous support and cooperation
throughout our project, without which the present would not have been possible. She continuous
guided we till the last word of this project and an excellent guidance to ours. She made numerous
valuable suggestion and corrections, which greatly improved the quality of work.

The practical and theoretical knowledge that we have gained from them it help us in
enhancing our career and managing things in better way.














4

PREFACE

The objective of the practical training is to develop among the student clear cut knowledge
about industrial environment and business practice over above theoretical study of management by
analysis. The practical experience develops sense of awareness and gives knowledge to analyze real
life problems.
The main objective of this project study is to help the students to develop ability of research
of the products or sectors and practical technique to solve real life problem related to the products
.In this grand project report we have tried to analyze the needs of the customers and suggest them
the most suitable product solutions, as well as we have also analyzed the brand awareness among
the people
The project provides an experience which is must have for the management and
administration students.


















5

Index

Chapter
No.
Topic Page no.
1
Introduction

1.1 Introduction to Banking Sector
1.2 Introduction to Agriculture Sector
1.3 Introduction to Textile Sector
6 10

6 8
8 9
9 - 10
2 Literature Review 11 - 15
3 Objectives of the Study 16
4
Research Methodology

4.1 Significance of the Study
4.2 Analysis of Agriculture Sector
4.3 Analysis of Textile Industry
4.4 Comparison of Agriculture and Textile Industry
4.5 Limitations of Study
17 36


19
20 26
27 31
32 34
35 36

5 Conclusion 37
6 Findings 38
7 References 39
8 Annexure 40


6

Chapter 1 Introduction

4.1 Introduction to Banking in India
A bank is a financial institution that accepts deposits and channels those
deposits into lending activities. Banks primarily provide financial services to
customers while enriching investors. Government restrictions on financial activities
by banks vary over time and location. Banks are important players in financial
markets and offer services such as investment funds and loans. In some countries
such as Germany, banks have historically owned major stakes in industrial
corporations while in other countries such as the United States banks are prohibited
from owning non-financial companies. In Japan, banks are usually the nexus of a
cross-shareholding entity known as the keiretsu. In France, bank assurance is
prevalent, as most banks offer insurance services (and now real estate services) to
their clients. Bank a corporation empowered to deal with cash, domestic and foreign,
and to receive the deposits of money and to loan those monies to third-parties.
Definitions
Bank has been defined by various authors, experts and judges. The definitions
are given below:
(a) Bank is defined as a noun, An establishment for receiving, keeping, lending,
or, sometimes, issuing money, and making easier the exchange of funds
by checks, notes, etc. the office or building of such an establishment , the
fund put up by the dealer in baccarat, out of which losses are paid, the entire
monetary pool of a gambling establishment, a common fund of chips, pieces,
etc. used in playing a game, as poker or dominoes, a reserve of things for later
distribution or use, or a place for this; a store of blood for transfusions, body
organs for transplantation, etc., a store or a device for keeping retrievable data
a memory bank
(b) Business Definition, Bank is a commercial institution that keeps money in
accounts for individuals or organizations, makes loans, exchanges
currencies, provides credit to businesses, and offers other financial
services.
An Organization Usually a corporation, chartered by a state or federal
government, which does most or all of the following: receives demand deposits and
time deposits, honors instruments drawn on them, and pays interest on them;

7

discounts notes, makes loans, and invests in securities; collects checks, drafts, and
notes; certifies depositor's checks; and issues drafts and cashier's checks
Bank is a Financial Institution That is licensed to deal with money and its
substitutes by accepting time and demand deposits, making loans, and investing in
securities. The bank generates profits from the difference in the interest rates charged
and paid.
Bank is an Establishment, Authorized by a government to accept deposits,
pay interest, clear checks, make loans, act as an intermediary in financial
transactions, and provide other financial services to its customers.
History of Banking in India
The first bank in India, though conservative, was established in 1786. From
1786 till today, the journey of Indian Banking System can be segregated into three
distinct phases:
Early phase of Indian banks, from 1786 to 1969
Nationalization of banks and the banking sector reforms, from 1969 to 1991
New phase of Indian banking system, with the reforms after 1991

Phase 1

The first bank in India, the General Bank of India, was set up in 1786. Bank of
Hindustan and Bengal Bank followed. The East India Company established Bank of
Bengal (1809), Bank of Bombay (1840), and Bank of Madras (1843) as independent
units and called them Presidency banks. These three banks were amalgamated in
1920 and the Imperial Bank of India, a bank of private shareholders, mostly
Europeans, was established. Allahabad Bank was established, exclusively by Indians,
in 1865. Punjab National Bank was set up in 1894 with headquarters in Lahore.
Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda,
Canara Bank, Indian Bank, and Bank of Mysore were set up. The Reserve Bank of
India came in 1935.
During the first phase, the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1,100 banks,
mostly small. To streamline the functioning and activities of commercial banks, the
Government of India came up with the Banking Companies Act, 1949, which was
later changed to the Banking Regulation Act, 1949 as per amending Act of 1965 (Act

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No. 23 of 1965). The Reserve Bank of India (RBI) was vested with extensive powers
for the supervision of banking in India as the Central banking authority. During those
days, the general public had lesser confidence in banks. As an aftermath, deposit
mobilization was slow. Moreover, the savings bank facility provided by the Postal
department was comparatively safer, and funds were largely given to traders.
Phase 2

The government took major initiatives in banking sector reforms after
Independence. In 1955, it nationalized the Imperial Bank of India and started offering
extensive banking facilities, especially in rural and semi-urban areas. The
government constituted the State Bank of India to act as the principal agent of the
RBI and to handle banking transactions of the Union government and state
governments all over the country. Seven banks owned by the Princely states were
nationalized in 1959 and they became subsidiaries of the State Bank of India. In
1969, 14 commercial banks in the country were nationalized. In the second phase of
banking sector reforms, seven more banks were nationalized in 1980. With this, 80
percent of the banking sector in India came under the government ownership.
Phase 3

This phase has introduced many more products and facilities in the banking sector
as part of the reforms process. In 1991, under the chairmanship of M Narasimham, a
committee was set up, which worked for the liberalization of banking practices. Now,
the country is flooded with foreign banks Role of Banking in Indian Economy.

4.2 Agricultural Sector
A large proportion of the population in India is rural based and depends on
agriculture for a living. Enhanced and stable growth of the agriculture sector is
important as it plays a vital role not only in generating purchasing power among the
rural population by creating on-farm and off-farm employment opportunities but also
through its contribution to price stability. In India, although the share of agriculture in
real GDP has declined below one-fi fth, it continues to be an important sector as it
employs 52 per cent of the workforce. The growing adult population in India demand
large and incessant rise in agricultural production. But per capita availability of food,
particularly cereals and pulses, in recent years has fallen significantly. As a result,
slackening growth of agriculture during last decade has been a major policy concern.

9

Three main factors that contribute to agricultural growth are increased use of
agricultural inputs, technological change and technical efficiency. With savings being
negligible among the small farmers, agricultural credit appears to be an essential
input along with modern technology for higher productivity. An important aspect that
has emerged in last three decades is that the credit is not only obtained by the small
and marginal farmers for survival but also by the large farmers for enhancing their
income. Hence, since independence, credit has been occupying an important place in
the strategy for development of agriculture. The agricultural credit system of India
consists of informal and formal sources of credit supply. The informal sources
include friends, relatives, commission agents, traders, private moneylenders, etc.
Three major channels for disbursement of formal credit include commercial banks,
cooperatives and micro-finance institutions (MFI) covering the whole length and
breadth of the country. The overall thrust of the current policy regime assumes that
credit is a critical input that affects agricultural/ rural productivity and is important
enough to establish causality with productivity. Therefore, impulses in the
agricultural operations are sought through intervention in credit.

4.3 Textile Industry
Indian Textiles and Clothing Industry
The history of textiles in India dates back to the use of mordant dyes and
printing blocks around 3000 BC. The diversity of fibres found in India, intricate
weaving on its state-of-art manual looms and its organic dyes attracted buyers from
all over the world for centuries. India saw the building up of textile capabilities,
diversification of its product base, and its emergence, once again, as an important
global player. The Indian Textiles Industry has an overwhelming presence in the
economic life of the country. Apart from providing one of the basic necessities of
life, the textiles industry also plays a pivotal role through its contribution to industrial
output, employment generation, and the export earnings of the country. It contributes
about 14 per cent to industrial production, 4 per cent to the GDP, and 17 per cent to
the country's export earnings. It would provide direct employment to over 35 million
people by 2010, which includes a substantial number of people from less privileged
sections of society [1]. Mills, power looms and handlooms constitute three
independent sectors of the Indian textile industry. The mill sector is organized,
mechanized and modernized production of yarn whereas the power loom and
handloom sectors have remained technologically backward and stagnant. Almost all
the spun yarn made in India come from the organized sector, reflecting the highly
capital intensive nature of yarn spinning. Weaving in the mill sector has been

10

gradually suffering due to An Analysis of Structure & Growth of the Indian Textile
Industry After Phase National Conference on Emerging Challenges for Sustainable
Business 2012 18 the competition from the power loom and the trend may continue
[2]. The decentralized power looms sector plays a pivotal role in meeting the clothing
needs of the country. The power loom industry produces a wide variety of cloth, both
grey as well as processed. Production of cloth as well as generation of employment
has been rapidly increasing in the power loom sector. There are 22.38 lakh power
looms in the country as on 31st December,2009 distributed over approximately 5.03
lakh units. This is about 60.39 percent of the total looms in the world. The power
loom sector contributes about 62 percent of the total cloth production of the country,
and provides employment to about 55.95 lakh persons during the year 2008-09. As an
economic activity, handloom is the 2nd largest employment provider next only to
agriculture. The sector with 60.40 percent about 35 lakh handlooms provides
employment to 65 lakh persons, of which 60.40 percent are women and 35 percent
belong to minority section of the society [3]. The textiles sector is the second largest
provider of employment after agriculture. Thus, the growth and all round
development of this industry has a direct bearing on the improvement of the economy
of the nation. The Indian textiles and apparel industry has an unbalanced structure, 95
% of the industry is the unorganized and only 5 % is the organized. Sector
consolidation process in certain segments, to take advantage of economies of scale is
necessary. This will generate more employment, as smaller operations affect cost and
competitiveness













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Chapter 2 Literature Review

The research will study the role of banks in development of various sectors by
sanctioning credit to the sectors like Agriculture and industries. The deployment of
credit is observed in the agriculture for past 7 years; beside this the research in
Industrial sector is limited to that of Textile Industry which will also be assessed on
the data from last 7 years. This data consists of the number of accounts in each of the
sector and credit deployed by the different banks in past years. In this way it will give
us the idea about the deployment of credit by the banks to the concerned sector which
leads to the development of those sectors.
Moreover the research will be also concerned with the output of the textile
industry in past years to see that how efficiently the credit is utilized for the
development of the industry. The study will be analyzed with the help of statistical
tools like correlation or regression on basis of the variables like output, credit
deployment etc.
The agriculture sector will determine the representation of data with the help of
direct finance and indirect finance by Private sector as well as scheduled commercial
banks.
The Textile industry will be interpreted into different parts like Cotton Textile,
Jute and other natural fibres, Handloom and Khadi and other Textile products. This
will be guide by the credit from private and scheduled commercial banks.

Impact of agriculture credit
India has systematically pursued a supply leading approach to increase agricultural
credit. The objectives have been to replace moneylenders, relieve farmers of
indebtedness and to achieve higher levels of agricultural credit, investment and
agricultural output. Among earlier studies, Binswanger and Khandker (1992) found
that the output and employment effect of expanded rural finance has been much
smaller than in the nonfarm sector. The effect on crop output is not large, despite the
fact that credit to agriculture has strongly increased fertilizer use and private
investment in machines and livestock. High impact on inputs and modest impact on
output clearly mean that the additional capital investment has been more important in
substituting for agricultural labor than in increasing crop output.

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Between bank nationalization in 1969 and the onset of financial liberalization in 1990
bank branches were opened in over 30,000 rural locations which had no prior
presence of commercial banks (called un-banked locations). Alongside, the share of
bank credit and savings which was accounted for by rural branches raised from 1.5
and 3 percent respectively to 15 percent each (Burgess and Pande, 2005). This branch
expansion was an integral part of Indias social banking experiment which sought to
improve the access of the rural poor to cheap formal credit. The estimates suggested
that a one percent increase in the number of rural banked locations reduced rural
poverty by roughly 0.4 percent and increased total output by 0.30 percent. The output
effects are solely accounted for by increases in non-agricultural output a finding
which suggests that increased financial intermediation in rural India aided output and
employment diversification out of agriculture.
In a detailed paper, Mohan (2006) examined the overall growth of agriculture and the
role of institutional credit. Agreeing that the overall supply of credit to agriculture as
a percentage of total disbursal of credit is going down, he argued that this should not
be a cause for worry as the share of formal credit as a part of the agricultural GDP is
growing. This establishes that while credit is increasing, it has not really made an
impact on value of output figures which points out the limitations of credit. In another
study, Golait (2007) attempted to analyse the issues in agricultural credit in India.
The analysis revealed that the credit delivery to the agriculture sector continues to be
inadequate. It appeared that the banking system is still hesitant on various grounds to
purvey credit to small and marginal farmers. It was suggested that concerted efforts
were required to augment the flow of credit to agriculture, alongside exploring new
innovations in product design and methods of delivery, through better use of
technology and related processes. Facilitating credit through processors, input
dealers, NGOs, etc., that were vertically integrated with the farmers, including
through contract farming, for providing them critical inputs or processing their
produce, could increase the credit flow to agriculture significantly.
In general, it is difficult to establish a causal relationship between agriculture credit
and production due to the existence of critical endogeneity problem. However,
Sreeram (2007) concluded that increased supply and administered pricing of credit
help in the increase in agricultural productivity and the well being of agriculturists as
credit is a sub-component of the total investments made in agriculture. Borrowings
could in fact be from multiple sources in the formal and informal space. Borrowing
from formal sources is a part of this sub-component. With data being available
largely from the formal sources of credit disbursal and indications that the formal
credit as a proportion of total indebtedness is going down, it becomes much more
difficult to establish the causality. He also stated that the diversity in cropping

13

patterns, holding sizes, productivity, regional variations make it difficult to establish
such a causality for agriculture or rural sector as a whole, even if one had data.
Finally, he argued that mere increase in supply of credit is not going to address the
problem of productivity, unless it is accompanied by investments in other support
services. In the present study, we take a re-look at the problem by quantitatively
assessing the impact of institutional credit expansion on agriculture.
As it is already mentioned, the recent trends in agricultural growth and
development have shown a sharp deceleration in the agricultural sector despite an
overall impressive growth of Indian economy is a major cause of concern today.
Thus, it led to intense debate in the country, both in academic and policymaking
circles. In the recent period, many arguments have come up analyzing the potential
impact liberalisation on farming community. There are two groups of people
explained the reasons for poor performance of agriculture in the post reform era. One
group of people, Gulati, Kelly and Narayanan, S. claimed that the slow pace of
agricultural liberalization (domestic and external) is responsible. Another group, Sen
and Patnaik blames the withdrawal of state support to agriculture and the integration
of agriculture into global markets, due to liberalization pressures. The two groups
have advocated an increased role for either markets or the state as the solution.

There are many other arguments came up arguing in this line showing multi
dimensions of the crisis. In the light of above discussion, we now try to look at the
reasons addressed by different authors in explaining crisis. They are variety of
reasons put forward in the literature, sum of them are discussed below.
Vakulabharanam (2008, 2005) argues that the state had offered various input
subsidies, especially in the provision of fertilizers, electricity and credit. It had
provided infrastructural support (primarily in irrigation and electricity) and extension
services to cultivators. It had also provided minimum support prices for agricultural
output. The policies after 1990, unevenly withdraw this support to the farming
community.
The reduction of domestic support in terms of subsidy and credit on the one
hand and drastic price fall of agricultural commodities in the international market on
the other hand led to distress in the farming class. Chandet, al (2007) and Chand
(2005, 2004) argues, the main factors which led to a slowdown in agriculture at
national level after 1996-97 are: (a) decline in the area under cultivation, which
seems to be a result of expanding urbanization and industrialisation, (b) deterioration
in the terms of trade for agriculture, (c) stagnant crop intensity, (d) poor progress of

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irrigation and fertiliser, (e) Decline in supply of electricity to agriculture, and (f)
slowdown in diversification.
Mishra Srijit (2007) and Reddy and Mishra(2008), Crisis in agriculture was
well underway by the 1980s and economic reforms in the 1990s have only deepened
it the major reasons brought out in the light of agricultural distress are vagaries of
nature (primarily, inadequate or excessive water),lack of irrigation facilities, market
related uncertainties such as increasing input costs and output price shocks mainly
commercial and plantation crops due to agricultural trade liberalisation, unavailability
of credit from institutional sources or excessive reliance on informal sources with a
greater interest burden and new technology among other.
Zhang and Dardis (1991) investigated the determinants of the textile export
performance of 27 major textile exporting countries. The authors measured export
performance by a countrys gross exports and net exports. They used static and
dynamic models for the analysis. Their independent variables were physical capital,
technologicalcapital, human capital, unit labour costs, and domestic apparel
production. He found that in his study the more the stock of physical capital and the
higher the level of human capital, the more were the gross and net exports of textiles,
and the more the domestic apparel production, the less were the gross and net exports
of textiles. United States International Trade Commission (2001)Found that India is
also a leading cotton yarn manufacturer. There are over 1,500 spinning units (38,000
million spindles and 400,000 rotors) and 280 composite mills that are vertically
integrated from spinning to finished fabric. Thousands of smaller spinning units,
around 200 exclusive weaving units, and an estimated An Analysis of Structure &
Growth of the Indian Textile Industry after Phase National Conference on
Emerging Challenges for Sustainable Business 2012 1,700,000 power mills are also
in operation. In addition to the rich supply of natural fibres, India also has a robust
capacity in man-made fibre production and has global-scale production. India is one
of the top exporters of man-made yarns and fabrics in the world and stands third in
the production of filament yarn). Therefore, India isself-sufficient for fabric supplies
and has little need to import fabrics, either natural or synthetic, for apparel
manufacturing Gherzi (2003) , NIFT (1999 ) reported that in the initial phase of the
post-MFA era since 1 January 2005, the textile and clothing exports of China and
India should have grown much faster than what earlier happened under the transition
period since 1 January 2004, despite any WTO- consistent import curb measures that
the affected developed countries would likely institute. As the same time, the actual
growth of the textile and clothing exports from these countries would have been
dependent on how far these countries could manage their own export capabilities and
competitiveness and to what extent they were successful in identifying and exploiting

15

the opportunities; but, Indias trade past in not an encouraging indicator of its ability
to corner available trade gains for itself China presumed to be a better bet.
International Labor Organization (2005) opined that the competitiveness of the Indian
textile and apparel industry in the world market is dependent on several factors. One
of the most important factors is comparative advantage gained from its labor-
abundant economy. Labor costs in India are among the lowest in the world. Another
important factor is the rich supply of raw materials. India is the third largest cotton
producer in the world, with 25 percent of the worlds cotton-growing acreage, which
is the fourth highest in the world, and accounts for 15 percent of world cotton output
following the USA and China. India is also the second largest producer of silk, the
largest producer of jute, and one of the largest production bases for cotton/denims
and blends of linen.



















16

Chapter 3 Objectives of Study

The study is limited to the role of banking & its contribution to the agriculture
sector and textile industry. Following can be determined as prime objectives of the
study.
1) To analyze the contribution of banking assistance in agriculture and
development of agriculture.

2) To analyze the contribution of banks in industrial sector with reference to
textile industry and development of textile industry.

* These objectives are to be fulfilled by relating the assistance of banking credit with
reference to the performance by the each sector in terms of output.


Research Questions

The research questions can be directly linked to the objectives of the study. To
be more specific let us look at some important questions which leads to the study of
these sectors.
1) What is the role of banking in Indian Economy in context to development of
Agriculture sector?

2) What is the role of banking in Indian Economy in context to development of
Textile Industry?






17

Chapter 4 Research Methodology

Research Objectives:
The objectives are clear and defined. The relation between output and credit
deployment is to be analyzed to see how the specified sectors are developing.
Data Collection:
We are using Secondary data available from the prime institutions and data
collection agencies. The data is acquired from the statistical data of deployment of
credit by reserve banks and The Handbook of Indian Statistics. We are using these
secondary data for our research and these data are approved and are very reliable as
they are obtained by national level recognised institutions.
Table 57 Direct Institutional Credit to Agriculture (by Monetary Policy
Department, RBI)
Table 17 Agricultural Production of food grains. (by Ministry of Agriculture)
IBEF Report on Agriculture (August 2013)
Annual Reports by Indian Horticulture Department for fruits & vegetables
output.
Indian Horticulture Database 2011.
Financial Year-wise, Variety-wise Production of Cloth (Ministry of Textiles)

Data Analysis Tools
The research consists of two different sectors and we will use certain statistical
tools like correlation and Graphical Representation of data to determine the relation
between variables of the sectors under the study. For better understanding we will
look at how statistical tools will determine the performance of sector with respect to
the credit allocated by banks.
Method:
Co-relation
In statistics, dependence is any statistical relationship between two random
variables or two sets of data. Correlation refers to any of a broad class of statistical
relationships involving dependence.

18

We will use two major aspects which are credit deployment and output or
growth rate in each sector, namely Agriculture and Textile Industry as variables for
the determining correlation between two variables which will be deployment of credit
to the determined sector and production/output from those sectors. In this way we
will study the correlation of credit and output in each sector for the period of past 5
years.

Graphical Presentation:
Graphical presentations are the simplest form for presenting a data and it is
very easy to understand as well. The set of data will be plotted on the graph to see the
changing trend in the number of years specified. Most prominently the bar chart will
represent the data and explanation will be given at the end besides this the growth
rate in credit and the sector will be determined by line graph to show the changing
trend in the years.
Each Graph and tabular data will be explained and important contents will be
listed accordingly.

List of Commodities in Each Sector:
In Agriculture Sector:
Food grains:
Cereals (Wheat, Rice, other coarse cereals) & Pulses
Fruits & Vegetables:
All Major Fruits & Vegetables under Horticulture Department

In Textile Industry:
Three major varieties of cloth
Cotton cloth (Voile, Twill etc)
Non Cotton Cloth (Polyester, Silk, Rayon etc)
Other Blended cloth (Dobby, Spandex, Velvet etc)

19


4.1 Significance of the Study

Following are the significance / benefits of the study:
To see how the credit is allocates to the different sectors in the country.
To determine role of banking in development of economy with reference to the
specified sectors.
To show the emphasis of banking sector on the major sectors in the economy.
To analyze the deployment of credit by the banks to the agriculture sector and
the outputs of the agriculture sector.
To analyze the deployment of credit by the banks to the Textile Industry and the
outputs of the Textile Industry
To know about the output of different products under the sector
Comparing credit disbursement and the development of the sector year wise
To know whether the variables are positively or negatively correlated so that
credit and growth rate can be related
Side by Side comparison of the variables in agriculture as well as Textile sector.
To know the emphasis laid out on the important sectors of the economy
To know how efficiently the credit deployed to the sector is used for the
development of the sector.



20

Research Analysis
4.2 Analysis of Agricultural Sector
Here the data of past 5 years are represented in tabular as well as graphical
form. This data shows agricultural output which contain both vegetables and food
grains, Moreover the disbursement of credit to agricultural sector and its development
are also shown.

Output of Vegetables and fruits in past 5 years in India (in million tonnes)
Year
Production of Fruits &
Vegetables
Growth in Production
2009-10 205 3.54%
2010-11 215 4.88%
2011-12 232 5.10%
2012-13 241 3.73%
2013-14 268* 11.20%*
Source: Indian Horticulture Database
Economic Times
*The data for the year 2013-14 are expected on the current production basis.


Bar graph representing the production of fruits & vegetables





0
50
100
150
200
250
300
2009-10 2010-11 2011-12 2012-13 2013-14
Production of Fruits & Vegetables
Production
X axis = Years
Y axis = Production of fruits and Vegetables in million tonnes

21

Explanation: The above table and diagram represents the data regarding the
production of fruits and vegetables combined in the past 5 years. The X axis
represents the no. Of years while the Y axis represents the production of fruits and
vegetables. Since 2009 the production has been positive in terms of growth. It was
205 million tonnes in 2009-10 which gradually kept increasing to 215, 226, 257 &
268 million tonnes in the following years up to 2013-14. Which means the production
of vegetables and fruits have a significant growth from 2009-10.


Output of Food grains in past 5 years (in million tonnes)
YEAR CEREALS PULSE Total
2009-2010 203.45 14.66 218.11
2010-2011 226.25 18.24 244.49
2011-2012 242.2 17.09 259.29
2012-2013 236.92 18.45 255.36
2013-2014 243.43 19.77 263.20

Bar Chart showing output of food grains from 2009-2014


Explanation:
The above table and chart shows the total food grains produced in the past five
years from 2009-2014. The X axis represents the no. Of years while the Y axis
represents the production of food grains in million tonnes. In this scenario the
production of food grains in the year 2009 was 218.11 million tonnes, which
0
50
100
150
200
250
300
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014
Total Foodgrains Produced
Total
Foodgrains
Produced
X axis = Years
Y axis = Production of food grains (in million tonnes)

22

increased gradually in the year 2010-11 and 2011-12 to 244.49 and 259.29 million
tonnes. There was a dip in the production of the food grains in the years 2012-13 as
compared to previous year as it came down from 259.29 million tonnes to 255.36
million tonnes. But later in 2013-14 the estimations have shown a rise in production
which is set to be achieved up to 263.20 million tonnes.

Table showing credit deployment to agriculture and its development
Year
Credit
Deployed (in
billions) to
Agriculture
Growth in
Credit
Food grains
output
Vegetables
produced
Growth
Rate of
Agriculture
2009-10 2228.93 14.31% 218.11 7685120 1.04%
2010-11 2667.57 19.68% 244.49 7428103 7.03%
2011-12 3659.35 37.18% 259.29 7802629 3.65%
2012-13 4172.55 14.02% 255.36 8343001 1.91%

2013-14 -- -- 263.20 6890384 --
Note: Blank cells means that data is not yet available.

Bar Graph determining credit deployed to agriculture




0
500
1000
1500
2000
2500
3000
3500
4000
4500
2009-10 2010-11 2011-12 2012-13
Credit Deployed to Agriculture (in billions)
Credit Deployed (in
billions)
X axis = Years
Y axis = Credit Deployed to Agriculture in (Rs billions)

23


Line Graph showing trends between growth in credit deployed and agricultural growth

Explanation:
The above table and graphs shows different variables like credit deployment,
growth in credit and growth rate of the agricultural sector. In the first graph the X
axis represents no. Of years while Y axis represents the production of food grains and
in the second graph the X axis represents the no. Of years while Y axis represents the
Growth rate and Growth in Credit to agriculture sector. The credit deployed to the
agriculture sector has been gradually increasing from 2009 to 2013. The growth in
agriculture from 200-10 to 2012-13 is 14.31%, 19.68%, 37.18% and 14.02%
respectively. As compared to 2009-10 the total credit deployment has increased from
2228.93 billion to 4172.55 billion in the year 2012-12. On the other side growth rate
of agriculture sector for the years 2009-10 to 2012-13 are 1.04%, 7.03%, 3.65% and
1.91% respectively. This shows that total production has been increased year by
years.








0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2009-10 2010-11 2011-12 2012-13
Growth in Credit
Growth Rate
X axis = Years
Y axis = Trends of Growth in credit and Agriculture Growth Rate.

24

Reasons for fluctuation in Growth Rate of Agriculture Sector:

The agriculture growth rate has been very fluctuating even though the regular
increase in deployment of banking credit. Let us understand why.
1. The exports in these sectors are not performing well regularly, and we have
seen that export growth is not up to the mark.
2. The prominent reason is also the climate condition. Bad monsoon is always a
threat in case of Agriculture. Thats what happened in the years 2012-13,
Several droughts and irregularity in monsoon has hindered the production of
food grains and there was dip in production as compared to last year.
3. The Lack of transparency in the govt. Department and moreover corruption
regarding the deployment of funds to the farmers.
4. Devaluation of the value of currency which has decreased gross earnings from
the exports and import of technologies tends to be costlier.
5. Natural Calamities across the nation, one of the prime examples is flood in
Bihar and Kedarnath situations.














25

Correlation coefficient between growth in credit deployed and agriculture
growth:
Year Growth in credit Growth rate
2009-10 14.31% 1.04%
2010-11 19.68% 7.03%
2011-12 37.18% 3.65%
2012-13 14.02% 1.91%

Now taking growth in credit as x which is dependent variable and taking Growth rate of agriculture sector as
y which is independent variable, Lets calculate the correlation coefficient of the data
Year
Growth in
credit (x)
Growth
Rate (y)
xy x y
2009-10 14.31 1.04 14.8824 204.7761 1.0816
2010-11 19.68 7.03 138.3504 387.3024 49.4209
2011-12 37.18 3.65 135.707 1382.352 13.3225
2012-13 14.02 1.91 26.7782 196.5604 3.6481
Total 85.19 13.63 315.718 2170.991 67.4731
N=4

Karl Pearsons correlation coefficient method

r = 5(315.718)-(85.19)(13.63)
5[2170.991-(7257.34)] 5[67.4731-(185.78)]

Correlation coefficient (r) = 0.293674

26

When the correlation process is carried out, it is meant to show that how
strongly the two variables are connected. The correlation can be from -1 to 1 and
higher the value of the correlation means that values are highly dependent and related
to each other and vice versa. Zero describes that there is absence in the correlation
between the variables. One of the variables should be dependent and other might be
an independent variable.
This means there is positive relation between the growth in credit and
agricultural growth rate, which specifies that credit disbursement, has contributed to
the development of agricultural sector.
*Here growth in credit acts as a dependent variable and growth rate of agriculture in independent variable.



















27

4.3 Analysis of Textile Industry
The data will represent product wise output of the textile sector in past 5 years,
along with the growth in each type of product and combined growth. The data also
represents disbursement of credit to textile industry in past 5 years and development
and growth of textile industry in past 5 years.
Production of different types of cloth and growth rates in past 5 years (in mill sq
meters):
Year
Cotton Cloth Blended Cloth
Synthetic (Non
cotton) Total
Quantity
Growth
Rate of
Textile
Secotr
Qty.
Growth
Rate
Qty.
Growth
Rate
Qty.
Growth
Rate
2009-10 28790 7% 7769 15% 22438 9% 58996 9%
2010-11 31201 8% 8135 5% 21663 -3% 60999 3%
2011-12 30570 -2% 8468 4% 20567 -5% 59605 -2%
2012-13 33871 11% 9283 10% 18812 -9% 61966 4%
2013-14 23421 5% 6617 9% 12039 -5% 42077 3%
*Note: Data for 2013-14 is up to November 13, and growth rate is calculated as per the previous year up to November
month.
Data source (Ministry of textiles, India)
Charts Showing output and growth rate of textile industry:

X axis = Years
Y axis = Production of cloth in (million sq. Meters)

0
10000
20000
30000
40000
50000
60000
70000
2009-10 2010-11 2011-12 2012-13 2013-14
Total Output of Textile Industry
Total Quantity

28


X axis = Years
Y axis = Growth rate of Textile industry
Explanation:
The above table and charts represent different variables of the textile sector
like cloth wise and total production of textile sector and also the growth rate of the
textile sector. In the first graph the x axis represents no. Of years while the Y axis
represents the total production of cloth and in the second graph, the X axis represents
no. of years while Y axis represents the growth rate of textile industry. The total
production in the year 2009-10 was 58996 million sq. Meters which increased to
60999 in 2010-11. Later it dropped to 59605 in the year 2011-12 but increased further
in the years 2012-12 to 61966 million sq. Meters. For the years 2013-14 the data
show is up to Nov 2013 and the growth rate is calculated with previous year up to
November month only.
Table Showing Credit Deployment and Development of textile sector
Year
Credit Deployed
(in billions)
Growth in
Credit
Total Output of
Textile Industry
Growth Rate of
Textile Industry
2009-10 1097 19.31 58996 9%
2010-11 1300 18.51 60999 3%
2011-12 1435 10.38 59605 -2%
2012-13 1646 14.70 61966 4%
2013-14 1893 15.01 42077 3%

-4
-2
0
2
4
6
8
10
2009-10 2010-11 2011-12 2012-13 2013-14
Growth Rate of Textile Sector
Growth Rate

29

Graph showing Deployment of credit to Textile sector in past 5 years


X axis = Years
Y axis = Credit Deployed to Textile industry in (Rs billions)

Explanation:
The above table and graph specifies the deployment of credit in the past five
years from 2009-10 to 2013-14. The X axis represents the no. Of years while the Y
axis represents the credit deployed to textile industry in billions. The credit has been
continuously increasing year after year. In 2009-10 the credit deployed to textile
industry was 1097 billion which gradually increased to 1300, 1435, 1646 and 1893 in
the years 2010-11, 2011-12, 2012-13 and 2013-14 respectively. From the years 2009-
10 the credit deployed is almost doubled from 1097 billion to 1893 billion in 2013-
14. Besides this the growth rate trend has also been presented in the billion line graph
for the growth percent in deployment of credit and that of the Textile Industry growth
rate.





0
200
400
600
800
1000
1200
1400
1600
1800
2000
2009-10 2010-11 2011-12 2012-13 2013-14
Credit Deployed to Textile Industry (in billions)
Credit Deployed
(in billions)

30

Graph showing trends of growth in deployed credit and textile growth rate

X axis = Years
Y axis = trends of growth in credit and growth rate if textile industry.
Reasons for difference in Growth rate of Textile Industry:
1) The textile industry relies heavily on the export sector and from past few years
the Indian textile industry might be losing its edge in global market.
2) The competition in the International market has really gone up as the country
like China and Bangladesh are increasing there share in international market.
3) From past few years the production of blended cloth is decreasing because
China is providing synthetic cloth like silk at a comparatively low cost than
India.
4) Besides this economy of leading countries plays an important role in exports.
5) Devaluation of currency in the serious problem for the exporters.

Correlation coefficient between growth in credit deployed and agriculture
growth:
Year Growth in credit Growth Rate
2009-10 19.31% 9%
2010-11 18.51% 3%
2011-12 10.38% -2%
2012-13 14.70% 4%
2013-14 15.01% 3%
-5
0
5
10
15
20
25
2009-10 2010-11 2011-12 2012-13 2013-14
Growth in Credit
Growth Rate

31

Now here the growth in credit will be and it is a dependent variable and growth rate of textile industry is y
which is independent variable.
Year
Growth in
credit (x)
Growth
Rate (y)
xy x y
2009-10 19.31 9 173.79 372.8761 81
2010-11 18.51 3 55.53 342.6201 9
2011-12 10.38 -2 -20.76 107.7444 4
2012-13 14.7 4 58.8 216.09 16
2013-14 15.01 3 45.03 225.3001 9
Total 77.91 17 312.39 1264.631 119
N=5
Karl Pearsons correlation coefficient method

r = 5(312.39)- (77.91)(17)
[5(1264.631)-6069.970] [5(119)-(289)}

Correlation coefficient (r) = 0.853192

When the correlation process is carried out, it is meant to show that how
strongly the two variables are connected. The correlation can be from -1 to 1 and
higher the value of the correlation means that values are highly dependent and related
to each other and vice versa. Zero describes that there is absence in the correlation
between the variables. One of the variables should be dependent and other might be
an independent variable.
This means there is positive relation between the growth in credit and Textile
growth rate and correlation is relatively very high, which specifies that credit
disbursement, has contributed to the development of Textile sector.
*Here the growth in credit is dependent variable and Textile growth rate is independent variable.


32

4.4 Comparison of Agriculture and Textile Sector
Deployment of Credit (in billions)
Year
Credit deployed to
Agricultural Sector
Credit deployed to Textile Sector
2009-10 2228.93 1097
2010-11 2667.57 1300
2011-12 3659.35 1435
2012-13 4172.55 1646
2013-14 -- 1893


X axis = Years
Y axis = credit deployed to Agriculture and Textile Industry (in billions).
Explanation:
The above table and bar diagram shows the side by side comparison of the
deployment of credit to agriculture and Textile industry. The X axis represents no. Of
years while the Y axis represents the credit deployed to Agriculture and Textile
Industry in Billions. As the agriculture is the priority sector and thus more credit is
directed towards the agriculture sector but both the sectors have registered growth in
credit deployment every year. The credit to agriculture has increased from 2228.93 to
4172.55 billion from 2009-10 to 2012-13, on the other hand credit to textile has
increased from 1097 to 1646 billion from 2009-10 to 2013-13
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2009-10 2010-11 2011-12 2012-13
Credit deployed to
Agricultural Sector
Credit deployed to Textile
Sector

33

Growth in Agriculture and Textile sector:
Year Agriculture Growth Rate Textile Growth Rate
2009-10 1.04% 9%
2010-11 7.03% 3%
2011-12 3.65% -2%
2012-13 1.91% 4%
2013-14 4.5%* 3%
The * means expected growth rate

X axis = Years
Y axis = trends of Agriculture Growth Rate and Textile Growth Rate
Explanation:
The above table and the line graph are showing the growth rate comparison
between agriculture and textile sector from the year 2009-10 to 2013-14. In the above
graph the X axis represents the no. of years while the Y axis represents the trends of
Agriculture and Textile Growth rate. However the growth rates of agriculture have
been positive throughout but have different trends. In textile sector there was negative
growth rate ascertained in the year 2011-12, other than this the growth rates are
positive. The agricultural sector recorded its lowest growth rate in 2009-10 which is
1.04% while its highest was in 2010-11 which is 7.03%. For textile sector the lowest
growth has been the negative value in the year 2011-12 which is -2% and highest is
9% in 2009-10. The line graph represents the trend between these five years for both
the sector.
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2009-10 2010-11 2011-12 2012-13 2013-14
Agriculture Growth
Rate
Textile Growth Rate

34

Reasons for stability in Textile Industry over Agriculture

The textile industry as compared to agriculture sector is more capable
financially because it can use different sources of Industrial Finance.

The textile industry is run by business houses which have their own source of
capital other than banking assistance which in case of agriculture, the farmers
do not have much of finance of their own.


The return on investment in Textile Industry is comparatively higher than
agriculture, most of the times it is hard to cover the investment in the
agriculture sector.

Both Textile industry and Agriculture depends on the climatic conditions, but
dependence of agriculture sector on climate is too much and progress is often
shackled by weather conditions.

Textile Industry in India is mostly depended on the Export earnings and it is the
prime focus to earn higher profits from export, moreover Indias textile export
is progressive.










35

Chapter 5 Findings

The banking sector is very important and backbone for finance in different
sectors.
The banking sector has been deploying credit regularly to major sectors of
Indian economy to help their development
The agriculture sector has been developed very much in past decades due to
banking assistance.
The agriculture sector is receiving major share of finance from banks and
financial institutions
The growth rate in Agriculture sector, though positive is very fluctuating
The growth of agriculture sector is much affected by other factors than just
banking finance.
There is positive correlation between the credit disbursement and growth of
Agriculture sector.
The textile industry is one of the fastest and one of the major industries in
India.
There is regular increase in banking credit for Textile Industry.
The textile industry contrasting to agriculture depends on the different sources
of Industrial Finance rather than just banking credit.
The exports are the major part of textile industry as India is one of the major
countries in textile production.
The Textile industry has much higher correlation between the growth rate and
credit disbursement as compared to agriculture sector.
Both Agriculture and textile industry are affected by different factors which
may block their development.







36

4.5 Limitations of the study

Limitations of Secondary Data

Relevance
Are the data up to date? If the data are being used as supplemental data, are the
data relevant to your own study? Are the units of measurement and population similar
to your primary data units? Are the definitions and concepts that form the basis of the
data the same? Is there a logical relationship between the secondary data and the
primary data? And finally, are the objectives, scope, and nature of the primary and
secondary data the same? It is often necessary to read the original research study and
avoid using the data at face value.
Availability and Sufficiency
Do the secondary data exist? For example, data related to computer usage by
the general public would be almost nonexistent 20 years ago. Are the data available
for public use? Sometimes the data are only available within an organization, or there
is a charge for the data. Are there enough data to make them a useful supplemental
source? For example, if a study is done on 25 girls suffering from eating disorders, it
might not be appropriate to generalize. It is more appropriate to generalize a study
that includes 10,000 girls across the United States.
Validity and Reliability
Are the secondary data valid and reliable? Do the data represent what was
supposed to be measured? How complete and accurate are the data? Have the data
been altered? Sometimes we are not looking at the original data results but at
numbers that have been manipulated in some way for another purpose. Because they
are secondary data, it is important to always check to see that they were obtained
from an original source and not from a source where the data might have been
altered.
Insufficient
Secondary data may be located which is relevant, accurate and available, but
incomplete for the purposes of closure.


37

Limitations of the Study:

We have analyzed data of only past five years.

There might be deficiency in the data of the sectors because of availability.

We have not indulged in any type to tests like t test, chi square test to
verify the research.

We have not collected the data from original institute like (ATIRA) for
collective data of Textile Sector.





















38

Chapter 6 Conclusions

We have concluded as per our mentioned objectives regarding the role of
banking sector in development of the Agriculture and Textile industry. As per the
analysis of each sector we have found that,
The agriculture sector mostly depends on the credit from banks and due to regular
increase in banking credit the agriculture has been growing regularly, so it is right to
say that deployment of credit has resulted into better development of the agriculture
sector.
The textile Industry is more financially sound than agriculture and it has other
sources of funds but banking assistance is also must and we have seen regular
increase in banking credit to textile sector and also growth and development of textile
industry because of credit deployed by the banks.


















39

Chapter 7 References

For our reference we have used numerous statistical data, books and websites
in order to make self understanding reports. Following are the sources of information:

For Definitions/ History & Statistical Tools:
http://en.wikipedia.org/wiki/Banking_in_India
Search Engine: Google and Bing
http://www.rbi.org.in
http://www.ibef.org
Book on: Research Methodology by Deepak Chawla & Neena Sondhi

For Data regarding the sectors
http://www.rbi.org.in/scripts/
RBI Publications
http://www.rbi.org.in/scripts/PublicationsView.aspx?id=15138
http://www.rbi.org.in/scripts/PublicationsView.aspx?id=15170
http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=Trend%20and%20Progress%20of%20
Banking%20in%20India
http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2240
http://texmin.nic.in/ermiu/pdata/prod_var_cloth.asp

Reference note of Promotion of Textile Industry (No. 4/RN/Ref./2013)
http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2240
Ministry of Textiles
Agricultural produce market committee (APMC) report
Research reports on Agriculture and Textile industry for literature




40









Chapter 8 Annexure