Agri Business

How tech-led rural financing, distribution are opening avenues for rural aspirants

Utpal Isser | Updated on: May 21, 2022
Representative image

Representative image | Photo Credit: -

The landscape struggles with generational need-gaps of access to credit, lack of technical know-how

All of us grew up reading about India as an agrarian nation, and with almost 70 per cent of the total population depending upon agriculture for sustenance the statement remains true. In FY21, the share of agriculture in the gross domestic product (GDP) reached almost 20 per cent for the first time in the last 17 years. This growth also came in the wake of the global pandemic, reflecting the entrepreneurial agility and resilience of rural India.  

Despite this tenacity and potential that resides in the rural agri landscape, the sector struggles with generational need-gaps of access to credit, lack of technical know-how, scale acumen and more. The common denominator amongst all of these challenges is technology. With the advent of the information age, when used strategically from the rural lens technology can truly unlock the entrepreneurial spirit of Indian smallholder farmers.  

Customer nuances  

The appetite for fostering agri entrepreneurship in the country exists en masse. Though, the distribution models for unlocking the same need a deeper understanding of the nuanced and dynamic data around rural households. For instance, traditional underwriting models assess individual incomes/paying capacity while sanctioning credit. The rural households, however, run on household incomes versus individual ones. One family member’s income can support another family member’s working capital needs and vice-versa. Similarly, while an end to end digitised approach may work extremely well in urban landscape, Indian farmers still need in-person induction and sustained customer support into new-age tech and tools.  

These customer insights play a critical role in ensuring the successful implementation of tech-led models and solutions in a heavily fragmented and diverse agri-ecosystem. The need of the hour is to eliminate the impediments to growth by providing aspiring farmers with distribution models that make tech adoption seamless, practical and easy to comprehend for them.  

A number of financing and distribution entities are identifying the potential of this growing market. Effective means of financing in terms of offering focussed and tailor-made solutions are a desirable design for this market, as the one-size-fits-all approach is not the ideal resolution. A dairy farmer from Gujarat whose primary requirement is the automation of his dairy farm in order to boost productivity and reduce reliance on manual labour will require a very different credit and distribution solution than that of a womanpreneur from Pune attempting to upstart her business after a covid induced lockdown. 

Technology & Mechanisation 

Rural financing and distribution entities with a tech distribution model today need to leverage IoT to automate the tracking, monitoring and invoicing of their mechanisation orders, to the tune that loan applications from sourcing to disbursement are completed in under 7 days. They need to maintain physical branches as well as digital presence by building more touchpoints for customers to enable the exchange of information and technology solutions like vKYC, e-mandate etc. Agri-Fintech enterprises are now also experimenting with AI-driven bots to automate customer interactions and to improve the overall experience. Implementation of dedicated SaaS platforms has also played an integral role in creating a well-rounded ecosystem bolstered by the ease of access. The incorporation of scorecards to assess and sanction financial products along with advanced credit engines can ensure the disbursement of loans upto 50 lakhs INR in a matter of minutes.  

The use of novel technologies such as blockchain-based solutions helps with creating smart contracts for user transactions and reducing the turnaround time of loan origination processes. These also improve the overall data security and help create more trust in the co-lending processes between the beneficiary and co-lending partners. Further, fintech entities with a focus on distribution act as a last-mile partner and are laying the foundation for youth from farming communities to come forward and try their hands at entrepreneurship.  

Outlook for 2022 & beyond 

Even though the mechanisation process in rural India has been a tad slower at 40-45 per cent compared to other agri strong nations such as Brazil at 75 per cent, the USA at 95 per cent, and China at 57 per cent, the growth has been steady with projections hinting at a substantial foundation to be built in the next few years. India is aiming to reach the coveted $5 trillion mark in terms of agri-revenue by 2024-25. To achieve this feat, the nation needs to grow at 9 per cent per year between 2020 and 2025, and a credit-backed, distribution and mechanisation powered bridge for farmers to become farmer-entrepreneurs will propel the rural-economy to new heights.  

A paradigm shift is apparent. Credit and distribution-centric entities are fueling the next phase of growth for Indian agriculture with technology and data at the centre of it.  

(The author is  Co-Founder, SarvaGram) 

Published on May 21, 2022
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