The three sectors of the Indian economy witnessed slowdown in 2011-12. Moderation in agriculture growth notwithstanding, the year witnessed an all-time high food grains output. The services sector reflected the slowdown in construction, while industrial growth slackened due to the disappointing performance of mining and manufacturing sub-sectors. Data relating to Q3 of 2011-12 shows that growth moderated for the fourth successive quarter to 6.1%, recording the lowest rate in the last eleven quarters. The agricultural sector is facing the heat of non availability of storage facility. According to RBI its is marked that the current stock of food grains, at 53 million tonnes, continues to be much higher than the quarterly buffer and security reserve requirements.
PE & IB :IDENTIFY NEW AGRICULTURE AREAS.
India needs extensive investment to support agricultural research, development of water resources, infrastructure, particularly, power, storage and transportation.PE and IB needs to focus on these areas of investments where Agricultural growth can be achieved. New strategies need to be developed for doing investments into these areas. In Western economies its is found that factors which are driving interest in agriculture are surging commodity prices; increasing dfood demand of agri products thus prices will remain high for the medium-term and sustained or growing demand for biofuels.
In an recent projection like the one from the United Nations' Food and Agriculture Organization found that 70% more food production will be needed to feed a projected global population of 9.1 billion people by 2050.Western economies are doing aggressive investments in agri products since they have identified that healthy commodity prices will continue to climb and are here to stay since Asia can't feed itself. According to their investment target is focused on Asian nations which will need lot of commodity products and the suppliers will be from South America, but also from the United States and Canada. Hence western economies are making their PE and IB is just printing money from investments in agri sector. India has much potential to do investments.
PE can find investments in Crop insurance which is very much highly required in Indian demographic conditions.PE and IB will find prime opportunities in crop improvement and biotechnology, fertilizers, infrastructure, irrigation technologies and machinery. Yes among these entire investments one should not forget that a return from these investments is long term deal and good things takes time. Investments in agriculture typically have a longer time horizon than most private equity investments hence patience is the most important capital needs to be adopted by the PE.PE should invest in entrepreneurs who are coming into agriculture sector.