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Chief Guest Address
at the

50 years Celebration Conference,
Faculty of Economics & Social Sciences,
Szent Istvan University, Hungary

Prof. J.D. Agarwal
on 3rd December, 2007 at HUNGARY


Keynote Address Presentation (PDF) Format

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Chief Guest Address on
Innovations & Developments in
Financing and Investment in Agriculture and Rural Development
(with special reference to India and Hungary)

J. D. Agarwal
Professor of Finance
Chairman, Indian Institute of Finance , Delhi, INDIA
Editor-in-Chief, Finance India , Delhi, INDIA

Version: 15th November 2007

The authors gratefully acknowledge the technical support of Indian Institute of Finance. We would like to convey our thanks to our colleague at Indian Institute of Finance, Aman Agarwal, Yamini Agarwal, Deepak Bansal, and Pushpender Singh Raghav for their assistance in preparation of this paper. The views and reviews presented in the paper are views and opinions of the authors, based on our research and experience and do not depict institutional or countries views or of the institutions the authors are associated with. All errors and omissions are our own.


Prof. Szucs István, Conference Chair and President, Magyar Agrartudomanyi Egyesulet; Prof. Dr. Laszlo Solti, Rektor, Szent Istvan University (SZIU); Prof. Laszlo Villányi, Dean, Faculty of Economics, SZIU; Prof. József Molnár, Former Rector & Professor of Agriculture Economics, SZIU; Prof. Peter Bielik Ing, Dean, Szlovák Agrártudományi Egyetem, Nyitra; Prof. Mieczyslaw Adamowich, Director & Professor, Varsói Természettudományi Egyetem; .E. Ranjit Rae, Ambassador, Embassy of India in Budapest; Mr. S.V. Mani, Vice President, TATA Consultancy Services, Budapest; Prof. Harivansh Chaturvedi, Director, Birla Institute of Technology, Greater Noida; Dr. Harald Deisler, Director, Mezogazdasági Társadalombiztosítási Foiskola, Kassel, Németország; Dr. Jean de Kerguiziau, Director, CNAM, Közgazdasági és Egészségügyi Szolgáltatás Irányítói Tanszék; Dr. Velikovszky László, Director, Nemzeti Fejlesztési Ügynökség; Dr. Maria Kadlecikova, Director, FAO Európai és Közép-Ázsiai Regionális Központ; Mr. Ravi Krishnamoorthy, Vice President, TATA Consultancy services, Budapest; Prof. József Lehota, Chairman Scientific Committee and Director, MTA, SZIU; Dr. Katalin Takácsné dr. György , Conference Coordinator, SZIU; Honorable members of the Organizing Committee, other distinguished dignitaries on the dais, members of the this august audience and ladies and gentlemen, it is a matter of great privilege for me to deliver the Opening Plenary Chief Guest Keynote speech on “Innovations & Developments in Financing and Investment in Agriculture and Rural Development (with special reference to India and Hungary)” at this prestigious international conference organized by Szent Istvan University, Faculty of Economics and Social Science [December 3-6th, 2007]. At the outset I must congratulate the organizers for organizing this conference, selecting an extremely timely theme of Tradition and Innovation and having representation from all possible wings of the decision making process in the region with enriched global presence. It reflects the vision of the Hungarian Government, Industry, the society, the associations and Szent Istvan University jointly working to further the cause of equitable socio-economic growth with peace and prosperity in an effective and fair international business environment. Organizing an International Conference at this level is a very difficult task and tremendous efforts are required by a team of committed and devoted professionals to give it a final shape.

The theme of International Scientific Conference – Tradition and Innovation - has been rightly chosen by the organizers. In my address on “Innovations & Developments in Financing and Investment in Agriculture and Rural Development (with special reference to India and Hungary)”, I have tried to focus on issues like – innovations and developments in Agriculture and Agro-based industry, financing and investment in Agriculture and Rural Development in coping with the impact of climate change in balancing ecosystems and economic growth, Hungarian initiatives, India’s perspective and steps taken towards Green Revolution, international trends, financing possibilities for Agriculture and Rural Development and proposing the enhancement of Indo-Hungarian Relationship to foster growth in the societies. We have made an attempt to address to some of these finer issues and outline as to how these issues are being addressed globally, in Hungary and in India.

I wonder as to what extent I would be able to justify this great responsibility of delivering this Chief Guest Plenary Keynote address. It is a very difficult task and a great responsibility. However, it would be my endeavor to be up to the mark as far as possible or to the expectations of the organizers and galaxy of political leaders, practitioners, senior government representatives, bankers and members of financial institutions, and the intelligentsia.

I. Introduction
Nations around the globe are seriously concerned to develop both the agriculture and the rural areas. As these are suppose to be the central point of the economy with majority of people living in rural areas and dependent on agriculture. Development of agriculture is the precondition of industrialization. It is the agriculture and rural areas feeding the industry with raw materials and these sectors are also the major consumers as these are spread widely and have larger section of population living there.

Agriculture and rural development has not attracted the desired investment and the financing pattern is largely traditional. It is either left to the individuals living in rural areas, engaged in agriculture or the state and the local bodies. The corporates and major banks and financial institutions have played marginal role i.e. to the extent the state facilitated or asked them to involve themselves assisting these two sectors. The state and the governments have their own budgetary constraints. Lately the World Bank, and other international financial institutions are focusing on financing and investment in the agriculture and rural development. The strategies suggested and the policies adopted in the developed economies and developing economies with special reference to Hungary and India would be traced and highlighted. A new strategy in the changed paradigm is also suggested

While there are massive technological innovations in the technology (technological change) in agriculture with respect to methods of cultivation, seeds, development, difference use of land, soil testing, fertilizer, use of equipments etc almost all over the world yet larger part of agriculture despite impressive innovations is bound by tradition and traditional technology for various reasons. The funding available to agriculturists, their resource position, education, dependence on nature and natural resources, poor returns on investment and such other factors has not attracted desired investment and other resources in this most natural occupation of the world. Most of what is practiced is learnt from ancestors, villagers and the fellow agriculturists particularly in the developing economies of the world. What feeds the world and the nation unfortunately is not fed the same way in a reciprocal way by society.

Agriculture and rural areas and the people engaged and living there do not enjoy the status which is enjoyed by their counterparts in cities and metropolis. Poor infrastructure, weak social facilities such as high quality education, health, clubs and other social activities are missing in rural areas almost in the whole world economy. As a result their quality of life is generally low as compared to their counterparts.

The paper would discuss various innovations and developments in financing and investment in Agriculture and Rural Development with special reference to India and Hungary over the last one century. It would also analyze the traditional methods and suggest new strategies which can be adopted to make these two very important sectors vibrant and contributing to the GDP of the two countries. The speech would also high light the areas in which the two countries can learn from each other and cooperate in these two sectors.

II. Development in Hungary
2.1 Agriculture in Hungary

The potential agricultural area of Hungary is 9.3 million hectares of which the cultivated area is about 63% i.e. 5.8 million hectares, of total land area. About 6% of the active earners are employed in agriculture. Hungary is still an agricultural country compared to most European countries. More than 85 % of its territory is suitable for exploitation of soil fertility and agricultural activities. Nowadays two-third of Hungary is under agricultural practice, and the remaining 15 % serves for infrastructure, mining, industrial and military use as well as housing. Agriculture in Hungary has undergone a considerable recession during the last decade. The policy changes –such as agrarian cut backs, loss of domestic and foreign markets and reduction in the agrarian subsidies, caused some uncertainty in the short run. Gross production decreased by one-third in 1989-1993 followed by a slow increment during in recent years. Production increased in volume slowly in recent years (by 2-5 %, compared to preceding years).
During the communist period 90% of the farmland was organized into collective and state owned farms. In collective farms, different families worked together on jointly owned land and shared the earnings from farm output. Multi-party system and transition to the market economy in 1990, the new government began returning farms to private lands. The distribution of agricultural areas among sectors has changed i.e. proportions of forestry areas, reed-beds and fishponds have increased by 0.3 %, 2.4 % and 0.4 %, respectively, whereas the area of uncultivated arable land has been enlarged by 188 % in the 1990's. The extent of uncultivated area has increased by 21 %. This was caused by the uncertainty of ownership due to economic-political changes and also the growth of privatization. Hungary's exports of agriculture and food products in 2007 have shown very good results, which exceeded last year's record of 3.6 billion Euros. According to State Secretary Fulop Benedek the government seeks to boost Hungary's agriculture sector output by 30 percent in the next decade. Much of the increase will be sold outside the European Union, in countries such as Russia, where Hungarian exports are expected to total 300 million dollars this year, 10 percent more than in 2006.

2.2 Rural Development in Hungary
The Hungarian government has embarked on an ambitious four-year consolidation program following another election-year peak in the deficit in 2006 at 9.2% of GDP. Several programs were launched such New Hungary Development Program 2007; National Agriculture Environmental Program, National Rural Development Plan and new Hungary Rural Development Program (NHRDP) 2007-13 etc. However, the immediate revenue increases and spending cuts are temporarily damping growth. But, if all goes according to plan, the program will bring dividends to the economy in the longer term. This payoff is crucially dependent on Discipline in budgetary processes , Success in maintaining spending freezes and Implementation of the structural reform program . Hungary is focusing reforms of unemployment benefits and early-retirement pensions to boost employment and development in different parts of the country. Planned reforms to disability pensions look promising and a concrete proposal for old-age pension reform are in the pipeline.

Future reform needs to consider further strengthening of central-government provision requirements on municipalities regarding these services, matched by appropriate funding. The strategy for rural development has to focus on competitiveness encompassing modernization, integration and infrastructure; job creation in rural areas; inducing means for sustainable development; food safety; improving education and training for empowering human resource.

III. Development in India
3.1 Agricultural Development in India

Agriculture is the means of livelihood in India with over 70% of India’s population (i.e. over 700 million) engaged in agriculture and farming. Agriculture not only serves as a feeder for the industry but also the human race. Unlike the rest of the Global Economy , agriculture has seen little growth globally. The agriculture sector today is subjected to agriculture production stagnation, decline in per capita availability of food, increase in farmer suicides in the country and widespread of agrarian distress. This is despite the fact that the policy makers and leaders have always maintained agriculture to be INDIA's most important economic sector. Given this it is vital that the government together with international technical know-how brings-forth creative means to bring prosperity to the sector which has fed India for centuries.

In 1970s agriculture saw a huge increase in India's wheat production that heralded the Green Revolution in the country. The increase in post-independence agricultural production has been brought about by bringing additional area under cultivation, extension of irrigation facilities, use of better seeds, better techniques, water management, and plant protection. Dependence on India’s agricultural imports in the early 1960s convinced planners that India's growing population, as well as concerns about national independence, security, and political stability, required self-sufficiency in food production. This perception led to a program of agricultural improvement called the Green Revolution, to a public distribution system, and to price supports for farmers. The growth in food-grain production is a result of concentrated efforts to increase all the Green Revolution inputs needed for higher yields through better seed, more fertilizer, improved irrigation, and education of farmers. Although increased irrigation has helped to lessen year-to-year fluctuations in farm production resulting from the vagaries of the monsoons, it has not eliminated those fluctuations. Today, we see the re-emergence of the debate for the need for 2nd Green Revolution to enhance productive capacity of agro-produce for both domestic and global consumption with extensive focus on natural grown agro-products.

In India, agriculture all through since independence has been constitutionally the responsibility of the states rather than the central government. However, the latter plays a key role in formulating policy and providing financial resources for agriculture. Expansion in crop production, therefore, has to come almost entirely from increasing yields on lands already in some kind of agricultural use. The monsoons also play a critical role in Indian agriculture in determining whether the harvest will be bountiful, average, or poor in any given year. This has been because appropriate attention to irrigation facilities and dams has not been given by the state to reduce pure dependence on climate and environment for agricultural growth. We have seen that one of the objectives of government’s agro-policies since the early 1990s has been to find methods of reducing this dependence on the monsoons and enhancing productivity with water resource management and land fertility management through crop rotation.

Financing of Agro-Industry and farmers is and has been an emerging need for India. For the 1st time, Indian Institute of Finance (IIF), raised the issues of Financing Agriculture in 1997 and 1998, which came to the attention of the government and the corporate sector of India. Henceforth, the “Kissan Credit Card”, Easy Finance by Cooperative / Commercial Banks and Corporate Farming surfaced throughout the formal financial architecture in the country. The suggestions were based on the need for consumption loans and production finance being sourced by both the Institutional and Non-Institutional financing mechanisms.

Institutional sources include Government, co-operatives, rural banks, lead bank schemes and micro financing. Major financers to agriculture under this category are co-operatives. The cooperative movement in the country originated as a measure against rural poverty, aggravated by chronic indebtedness of the farmers and practice of usury at its worst by the money lenders. The cooperatives have been operating in various areas of the economy such as credit, production, processing, marketing, input distribution, housing, dairying and textiles. In some of the areas of their activities like dairying, urban banking and housing, sugar and handlooms, the cooperatives have achieved success to an extent but there are larger areas where they have not been so successful. Cooperatives in India entered the realm of providing institutional financing to agriculture much before the other agencies. Institutional financing system for agriculture commenced with the adoption of the Co-operative Societies Act in 1904. Adequate institutional finance for agriculture, however, received proper attention for the first time in 1951-52, when the All India Rural Credit Survey Committee (AIRCSC) recommended the concept of "Integrated Scheme of Rural Credit", which focused on strengthening and development of co-operative credit institutions at all levels. This was about 18 years before commercial banks ventured into the realm. The cooperatives, despite certain drawbacks continue to be the main provider of agricultural finance. From a meager credit share of 2.7 percent during the early 50's, the share of agricultural credit provided by cooperatives has increased to a phenomenal 45 percent by March 2001. Regional Rural Banks (RRBs) are state sponsored, regionally based and rural oriented commercial banks envisaged to combine simultaneously the desirable qualities of both co-operative banks and commercial banks. RRBs, being an important segment of the Rural Financial Institutions in the country, have carved out a special place for themselves in terms of geographical coverage, clientele outreach, business volume and contributions for development of rural economy. NABARD formulated a Model Kissan Credit Card Scheme in consultation with major banks. Model Scheme circulated by RBI to commercial banks and by NABARD to Cooperative banks and RRBs in August 1998, with instructions to introduce the same in their respective area of operation.

The recent initiatives taken up by the Government and NABARD to enhance agriculture productivity are
(i) the National Bamboo Mission;
(ii) Forecasting Agricultural Output Using Space, Agri-Meteorology and Land-based Observation (FASAL);
(iii) Capacity Building to Enhance the Competitiveness of Indian Agriculture and Registration of Organic Products Abroad;
(iv) Jute Technology Mission; and
(v) Terminal Markets under the National Horticulture Mission.

An outlay of Rs. 4,800 crore has been allocated at the Budget Estimate (BE) stage for the Annual Plan 2006-07. This constituted an increase of 14.85 per cent over the BE of Rs 4179.32 crore that was provided for the year 2005-06. The Department of Agriculture and Cooperation is extensively working to formulate national policies and programs for achieving rapid agricultural growth through the optimum utilization of India’s land, water, soil and plant resources. To further the cause and objective, the department intends to setup 24 divisions on Technology Mission with extensive focus on Oilseeds, Pulses and Maize. The program would have 4 offices; 21 subordinate offices; 2 Public Sector Undertakings (PSUs); 7 autonomous bodies; and 11 national-level cooperative organizations under its administrative control to enforce the task. In addition, 2 authorities, namely, the Protection of Plant Varieties and Farmers Rights Authority; and the National Rain-fed Area Authority have been set up to monitor the progress of the divisions in-accordance with the objective of the Ministry and the Department of Agriculture and Cooperation.

On the Agriculture credit front, the Ministry of Agriculture intends to introduce Ground-level credit flow, enhance Kissan Credit Card, ease credit rate for agriculture loans and deepen the reach of cooperative financial institutions in rural regions of the country. The government is projecting increase the ground level credit form for agriculture and allied activities to Rs 175,000.00 crore during 2006-07 from Rs 125,309.00 crore (in 2004-05) and Rs 167,775.00 crore (in 2005-06). The department was able to provide credit flow to Rs 149,343.16 crore till up to December 2006, forming 85.34 per cent of the target. The Kissan Credit Card Scheme has also been extended to the borrowers of longterm cooperative credit. The rate of interest on crop loans up to the extent of Rs 3.00 lakh has been reduced to 7 per cent per annum. For farmers who have availed of crop loans from commercial banks, regional rural banks and Primary Agricultural Credit Societies (PACS) for Kharif and Rabi 2005-06, an amount equal to two percentage points of the borrowers' interest liability on the principal amount up to Rs 100,000 has been credited to his/her bank account before 31 March 2006. Also a rehabilitation package of Rs 16,978.69 crore has been announced for 31 suicide prone districts in the States of Andhra Pradesh, Maharashtra, Karnataka and Kerala, and will be implemented over a period of three years. These are some of the key initiatives undertaken by the government to ease the finance cash flows to enhance innovation, development and investment in agriculture in India.

On the international front, the twenty-sixth World Food Day (WFD) was observed on 16 October 2006 with the theme as ‘Invest in Agriculture for Food Security’. The government has initiated and implemented upon three projects under the Technical Cooperation Program of Food and Agriculture Organization (FAO); five projects were assisted by the World Bank; and the WFP Country Program 2003-2008. The Department of Agriculture and Cooperation is the nodal department for one joint commission - the Indo-Burkina Faso Joint Commission for Economic, Cultural, Political and Technical Cooperation. During the year 2006-07 (up to 1 December 2006) six agreements/Memorandums of Understanding (MOUs)/work plans for cooperation in the agriculture and allied sector were signed with China, India-Brazil-South Africa (IBSA), Israel, Sudan, Nambia and Jordan to jointly enhance agro-based industries and agricultural produce in the respective countries.

3.2 Rural Development in India
Rural development has witnessed several changes over the years in its emphasis, approaches, strategies and programs. India’s 65% of population lives in Rural areas engaged in agriculture and agro-based industrial occupations. Development in rural areas is seeing a face lift with matching of living standards in smaller urban townships. The government, banks and voluntary organizations are having focus in enhancing recent trends and the programs implemented under the restructured departments of Ministry of Rural Development. Development can be richer and more meaningful only through the participation of clienteles of development. Just as implementation is the touchstone for planning, people's participation is the centre-piece in rural development. People's participation is one of the foremost pre-requisites of development process both from procedural and philosophical perspectives. For the development planners and administrators it is important to solicit the participation of different group of rural people, to make the plans participatory. Hence the role of peoples participation and the panchayts through Self Help Groups have shown progressive returns in bringing effective Rural development in select corners of the country.

India’s Bharat Nirman program, aims to upgrade India’s rural infrastructure. The year’s targets for rural telephony, water supply, housing and new roads have been met. However, there was a shortfall in electricity and irrigation coverage, which are vital components for both rural and agricultural upliftment. Reviewing progress on one of the government’s most ambitious development programs, Indian Prime Minister Manmohan Singh announced that the Bharat Nirman program would continue to work towards improvement in India’s dismal rural infrastructure. Launched in 2005, Bharat Nirman seeks to cover all Indian villages with electricity, all-weather roads, potable water and telephones by 2009, at a cost of around Rs 174 trillion. In addition, 60 lakh new houses will be constructed and 1 crore hectares brought under irrigation.

Taking stock of the progress made by September 2006, Dr. Manmohan Singh said that 18,708 km of rural roads had been constructed, against a target of 15,492 km. Also, 30,251 villages out of 66,822 have been covered under rural telephony. In the area of rural housing, against a target of 1.5 million houses for 2005-06, 1.54 million have already been constructed. As regards rural water supply, under the category of lapsed coverage habitations, against a target of 34,373 habitations, 70,416 were covered. The target for habitations not covered is 11,879, against which 11,526 have so far been covered. Under rural electrification, against a target of 10,000 villages to be electrified, 9,819 villages were connected in 2005-06. However, the next two years will be crucial for the Bharat Nirman program, as the target for electricity coverage has been hiked to 40,000 villages per year. The prime minister said that notwithstanding its successes in these four areas, the government intended to see universal coverage where every village with a population of over 1,000 would have all-weather roads, water supply, telephone connections and electricity. The government also plans to build 6 million houses to address the problem of rural homelessness, and extend irrigation facilities to an additional 10 million hectares. A new system of franchisees for distribution has also been set up under the program; the franchisees will be self-help groups and entrepreneurs.

However, with regard to irrigation, the basic responsibility lies with the state governments. So far not all states have sent in their reports; from among those that have, 0.9 million hectares’ capacity had been created against a target of 1.9 million hectares for 2005-06. The government has proposed creating a separate window under the Rural Infrastructure Development Fund to source Rs 16,500 crore for the program. The new window, along with a total of Rs 48,000 crore, including a cess and an Externally Aided Project (EAP), will help bridge the funding gap.

Bharat Nirman, along with the National Rural Employment Guarantee Act, National Rural Health Mission and Sarva Shiksha Abhiyan, is aimed at giving a “new deal to rural India” under the United Progressive Alliance government’s Common Minimum Program.

IV. Innovations & Developments in Financing Investment
Economic growth induced by Innovation is expected to be financed with diversity value reflected in national identity; high value for place to live, work and do business; a birthplace of world-changing people and ideas and a place where people invest in the future. These are vital for a high value-added economy driven by innovation for sustainable growth. Innovation in general can be defined as any activity that produces a new and profitable product or service, or finds a more profitable way to produce an existing one. Ongoing commercial success is likely to require continuing innovation. The indicators showing innovations presence in the economic growth of a nation is with the level of investment in research and development (R&D); levels of patenting; firm level innovation; technology adoption; technology content of exports; publications and citations; and innovation linkages. Government policy should respond to the needs of both countries and organisations at each stage of this evolutionary process to involve human tallent to enhance innovation, development and financing of growth as an inhernt component of Economic growth in the country or a region. At any early stage of a country's economic development/reforms, policies should support efforts to imitate and adapt foreign technologies, as well as increase the education levels of the population. The capacity to adapt technology increases, particularly those relevant to local needs in the business and societal sector, in higher education institutions, and in public research laboratories indicates the inclusive nature of in-herent factors for sustained development.

Global Partnership tuned with globalization, innovation and financial developments in the world economy have altered the economic frameworks of both developed and developing nations in ways that are difficult to comprehend. The emergence of unregulated global markets has contributed to the move for a more stable and growth oriented economic globe. Last two decades, particularly since 1980 onwards, have been a witness to growth churned from global partnerships and privatisation worldwide. This trend has been observed both in developed as well as developing countries. The significant reduction in global trade barriers over the past half century has contributed to a marked rise in the ratio of world trade to GDP and the depth and frequency with which innovations have become a way of life in the corporate world. All this has been made possible with the objective to have global partnership for economic growth, upliftment of standard of living and reducing economic disparities in the global village. The vitality of global partnership with the support and collaborative efforts of the government, international agencies and sectors/sections in an economy clearly show that Interdependence has enjoyed the highest level of sphere of importance as compared to dependence or independence. This has been widely observed within India, China and other nations, who had closed access to their global markets in the last century and also within the economies which became overdependent on a few others. World Bank President James Wolfensohn in a speech to a conference on financing for development on 21st March 2002 said that he sees a growing consensus on what needs to be done to reduce poverty, globally. Wolfensohn welcomed recent pledges of additional aid from the U.S. and the European Union, and called on rich countries to "build the pressure" for additional funds for development and for a reduction in agricultural subsidies and other trade barriers to exports from developing nations. He stressed that much has been learned about ways to improve aid effectiveness, including the lesson that aid should encourage developing countries to design their own strategies for reducing poverty. It is a question of building up joint capacities to live and emerge in today’s world. No one, be rich or poor, can do all independently. Building Global partnership induces interdependence within the system. Wolfensohn rightly projecting the importance of collaborative efforts and building global partnership said "This is not about rich countries telling developing countries what to do. This is about creating a chance for developing countries to put in place policies that will enable their countries grow". I concur withhim completely.

Some of the emerging needs for enhancing innovations and development for both rural and agricultural regions are:
a. innovations to meet climate change
b. innovations to meet energy needs through renewable sources
c. creative means to counter un-employment
d. needs to be globally inter-connected simultaneously taking care of global financial disturbances (spillover effects)
e. inducing non-inflationary growth
f. innovations to counter terrorism and money laundering
g. Creating opportunities to make them self sufficient and resource generators.

V. Strategies to meet future Challenges:

It has been witnessed that contribution of agriculture to GDP has been declining world over. This may be because of several factors including increasing share of other sectors such as manufacturing and services. But it is also because agriculture is not modernized & modernized itself to meet the necessary challenges. Agriculture is considered not a lucrative activity. There is a large brain drain from agriculture. Declining ratio clearly shows that is not a preferred activity. On the other hand with intensive cultivation, hybrid seeds, scientific fertilizers, use of modern equipments and research in agriculture should have helped increase its ratio in GDP to go up or at least maintained at the same level. For example, the share of agriculture in GDP, in Hungary declined from 32% in 1920 to 27% in 1949, 18% in 1970, and 15.3% in 1990 to 2.9% in 2003 and in India, it declined from 50% in 1970-71 to 20.7% in 2005-06.

A serious strategy formulation and implementation can greatly help to avert this adverse situation. Multi-pronged strategy promoting micro credit in rural areas is the need of the hour.

- Government(s) in general acts as provider rather than facilitator or both. Governments should act as facilitator by creating appropriate opportunities to uplift the quality of life of people resulting in rural development.
- To provide latest technical know-how to boost productivity.
- Introducing hybrid financial products for agricultural development and setting up an agency to take care of the functioning of such hybrid products.
- Extensive schemes of Insurance of Crops, agriculturists and rural people should be considered by the governments.
- Funding schemes for coping with disaster management affecting farmers such as Tsunami, famines and droughts. To set up a fund or setting up a Bank for Reconstruction and Development of Agriculture and Rural Development, with an endowment fund or seed capital from government together with private partnership with a view to provide loans at cheap rates to take care of financing needs of farmers and rural people adversely affected by natural or man made disasters.

VI. Indo-Hungarian Initiatives
India and Hungary have similar challenges before agriculture and rural development. Both countries have seen boost of Agriculture and empowerment of society with enhanced flow of trade, services and products. The sharing of experience and competence where each country complements each other is the way to enhance global partnership between the two and make appropriate use of resources for the enrichment of the two societies. A large number of delegations visiting on either sides in the last decade at political, cultural and business levels is certainly a step in the right direction to enhance and foster equitable joint growth between the two countries and for the regions. A large number of areas like energy, organic agriculture, agro-based industries, healthcare and education are some key areas where the two nations may want to consider working together to enhance socio-economic setups in the two regions.

VI. Conclusion
The changing structure of world investment, trade, capital flow and the need for deeper integration, strengthening regulatory framework and signaling system is greater. Globalization has altered the economic frameworks of both developed and developing nations in ways that are difficult to comprehend. Innovation has seeded the need to finance development and growth in rural regions. Also the emergence of unregulated global markets appears to have moved towards a more stable and growth oriented economic globe. What is needed today is to develop sensitivity sensor systems to promote technology within the financial framework as an integrated approach to keep markets from busting and causing socio-economic panics. Faced with these uncertainties, it is especially important that policymakers undertake the required policy adjustments for a sustained global expansion. As well, supervisory and regulatory authorities need to continue to strengthen energy financial market infrastructure to underpin the resilience of the ecosystem towards sustained development and clean tomorrow.

Jai Hind.

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