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Sluggish agri lending in states with debt waiver scheme

Agriculture lending growth has come down to around 6%, from 16% last year

Namrata Acharya  |  Kolkata 

Agriculture Lending

States which rolled out schemes in the recent months are witnessing sluggish growth in Agriculture accounts for more than 80 per cent of in rural areas.

Across the country, growth has come down to around 5.8 per cent on a year-on-year basis as on September 2017, as against 15.9 per cent in the same period last financial year. This is one of the steepest fall in by in the last few years.

Fall in is also likely to impact food grain production, which is already showing a downward trend. According to the first advance crop estimates for foodgrain production by the government, total in the country in 2017-18 is pegged at around 134.67 million tonnes- a little less than the projected figures of the first advance estimates in 2016-17 at 135.03 million tonnes.

In Maharashtra, rural by in Q2 of FY18 was around 6 per cent less compared to the same period last year, when the net amount doled out by stood at Rs 48,856 crore. In Uttar Pradesh, which had announced a massive scheme, the rural had shown a meagre growth of around 2 per cent year-on-year growth at Rs 79,400 crore in the last quarter. This is in stark contrast to the 20 per cent growth the state managed to clock in the same quarter last year.

is a part of priority sector lending, and if fail to meet the targets they need to deploy amounts equal to the shortfall in the low-yielding (RIDF).

In June this year, the government announced a of Rs 34,000 crore for nearly 8.9 million Earlier, the government waived loans worth Rs 36,359 crore for about 21 million This apart, waived loans of around Rs 20,000 crore; Punjab Rs 10,000 crore; Rs 15,000 crore; and Karnataka Rs 8,000 crore.

In Karnataka, rural growth has come down from around 17 per cent last year to around 6 per cent this year. In Telengana, it has come down from around 20 per cent to about 3 per cent. In Andhra Pradesh, it has come down from around 16 per cent to 14 per cent, and in Rajasthan too, agri fell from around 16 per cent to cround 10 per cent, according to data available with the Rserve Bank of (RBI).

"The actual non-performing assets (NPAs) in the agriculture sector is often not reflected in books as there is rampant restructuring. Now with going through tough times, and NPAs being on the rise due to farm loan waiver, has taken a hit," said an executive of a public sector bank (PSB).

According to data from the National Sample Survey Office (NSSO), between 2003 and 2013, average indebtedness of an agriculture household increased almost four folds.

The 70th round of NSSO (2013) revealed that for a monthly average income of Rs 6,426, the average debt was Rs 47,000. In 2003, the 59th round of the survey had showed that the per-family outstanding loan was Rs 12,585.

Around 8 per cent of the agricultural credit has to be given to marginal but can choose to do it directly or indirectly. usually prefer the indirect route, through microfinance institutions or non-government organisations, as this reduces the risk of default.

First Published: Tue, December 05 2017. 18:19 IST
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