Potential Linked Plan and Its
importance in DCP
D V Deshpande
Professor
VAMNICOM, Pune
dvdesh@nabard.org (M) 9919225539

Origin of Potential Linked Plan
• Part of Credit Planning exercise of Lead Bank Scheme
• Why credit planning is required?
• “Development through credit”
• Two broad categories of sectors- Real Sector & Financial sector-
• Banks can only provide money- Is it sufficient for growth?
• Banks prepare a Credit plan – consolidated into “District Credit Plan or Annual Credit
Plan”- presented in SLBC as State Credit Plan
• Supposed to be a top down approach
• Bank branch  Block District State

Different approaches
• Bottoms up vs Top down
• Demand driven vs supply driven

CRAFICARD observations on DCP
(Committee to review the arrangements for institutional credit
for agriculture and rural development 1979)
• Supply driven rather than demand driven
• Potential not taken into account systematically
• Emphasis on agriculture & allied activities not adequate
• Not aligned with development schemes of the district
• DCPs were based on banker’s budgetary plans
• The approach was top down

NABARD initiative on Potential Linked Plan
• To help, support and supplement banks in credit planning PLP were
introduced in 1988-89
• PLPs to reflect in more realistic way the ground level potentials, credit
and non-credit linkages
• PLPs are unique document at the district level giving the overview of
development (especially “Development through credit” related)
• PLP prepared by District Development Managers (DDM) of NABARD
• Lead Banks advised by RBI to use PLPs for ACP preparation in 2005

Objectives of PLP
• To enable various organizations involved in the process of rural
development in directing their efforts in a planned manner, in
accordance with the potentials available for exploitation.
• To enable optimum utilization of scarce financial resources
(specifically bank credit) by channeling the same into sectors with
growth potential.
• To assess the gaps in infrastructure support which need to be taken
care for exploiting the potentials and prioritise resource requirement
for the purpose.

Methodology
• Potential assessed based on scientific & quantitative method specific
to particular sector
• Example: Plantation/Horticulture:
• Estimation of additional area that could be brought under plantation crops
based on trend analysis of the land utilization pattern and cropping pattern of
the district, area of cultivable waste land likely to be treated and brought
under plantation crops;
• Feasibility and possibility of shifting from food crops to plantation crops;
• Estimation of replanting by taking into account economic life of plantation
crops
• Estimation of potential for rejuvenation of existing plantation
• Area multiplied by unit cost to arrive at financial estimates & after reducing
margin/ subsidies at bank loans

Process
• Pre PLP Meeting – to be convened by LDM to be attended by the
banks, govt. agencies, to
• share their views, suggestions, concerns – sector wise / activity wise
• Deliberate on major financial, socio-economic developments
• Set the Priorities for the PLP
• DDM NABARD will make presentation about the importance of PLP &
the requirements of information data and seek support of all
stakeholders

Process
• Preparation of sectoral papers- for all the sectors like agriculture,
horticulture, animal husbandry, fisheries, MSME etc. - there is a
group - “R-TAG”- of experts to prepare theme papers / sectoral
papers with district wise information
• State level papers on state policy initiatives , sponsored programmes,
sustainable agriculture, export credit, Housing loans, education ,
MSME etc
• Technical vetting – the PLPs are vetted for technical soundness and to
arrive at realistic bankable potential
• Projection should not be based on percentage increase over last year

• Vetting of first draft- prepapred based on surbey , discussions with
LDM, Bankers / govt officers etc & RTAG, arithmetical accuracy
• Proof reading
• Approval & Printing
• Soft copy available free on website : nabard.org

PLP Available on NABARD Website

Chapter composition/ contents
1. Introduction
2. Infrastructure and linkage support available, planned & gaps
3. Assessment of potential for 2020-21 in physical & financial terms
4. Critical interventions for creating impact
5. Suggested action points for the govt departments, banks & other
important agencies
6. Other related matters/ special programmes

Chapter Plan PLP
• Cover
• Foreword
• Index
• Executive summary
• Sector/ sub-sector wise projection
• District profile with district map
• Banking profile
• Methodology of preparing PLP
• Important Policies & developments- special chapter on “Hi-tech
Agriculture” for 2020-21

Chapter plan contd..
• Credit potential for agriculture
• Farm credit
• Crop production, maintenance & marketing
• Water resources
• Farm mechanisation
• Plantation & hiorticulture
• Forestry & wasteland development
• Animal husbandry:
• dairy
• Poultry
• Sheep, goat , piggery etc.
• Fisheries
• Farm credit others – bullocks , carts, two wheelers, etc

Chapter plan contd..
• Agri. Infrastructure
• Storage & marketing infrastructure
• Warehouses, market yards, silos, cold storage units, cold chains
• Land development , soil conservation, watershed development
• Agri infrastructure others –
• Tissue culture
• Agri/bio technology
• Seed production
• Bio pesticide, bio fertilizer
• Vermi composting

Chapter plan contd..
• Agri- ancillary activities
• Food & agri processing
• Agri-clinic / agri-business centre
• Loans to PACS/FSS/LAMPS
• Loans to MFI for onlending
• Credit potential for MSME
• A. Term loans-
• Manufacuring units : Micro, small Medium enterprises
• Services sector- Micro, small & medium

Chapter plan contd..
• Credit potential for export credit , education & housing
• Credit potential for infrastructure
• Infrastructure public investments
• Social infrastructure involving bank credit
• Renewable energy
• Informal credit delivery system- including potential for SHGs/ JLGs

Important annexures
I. Agency wise & blockwise physical & financial projections for the
year
II. Overview of ground level credit flow – last 4 years
III. Sub-sector wise and agency wise credit flow under agriculture and
allied activities – last 4 years
IV. Indicative unit costs for major activities
V. Scale of finance for major crops as fixed by District Level Technica;
Committee

Utility of PLP
• To banks:
• Provides inputs/information on Exploitable potential vis-a-v-s credit available
• Potential High Value Projects/Area Based schemes
• Infrastructure support available which can form basis for their
business/development plans
• To Government / development agencies:
• Developmental infrastructure required to support credit flow for tapping the
exploitable potential
• Other support required to increase credit flow
• Identification of sectors for Government sponsored programme

Utility contd…
• To private entrepreneurs:
• Private investment opportunities available in each sector
• Commercial infrastructure
• Information on various schemes of Govt & Banks.

Limitations and constraints
• Non-Availability of accurate granular data on credit flow – Sector and
sub-sector-wise;
• Non-availability of data required for estimation of potential in some
sectors with the line Depts.
• Imposition of targets/ reduction of targets based on major
developments

Conclusion
• PLP is unique document available to LDM , govt agencies & others for
developing the district
• I will urge you all to help DDMs in making it more robust and useful
and use it for “development through credit”!
THANKS