Punjab asks Nabard to chalk out strategy to boost investment

Expressing concern over slow growth of investment in agriculture and allied activities in Punjab, Finance Minister Parminder Singh Dhindsa asked Nabard to formulate an effective strategy in order to increase the investment credit in the state.

According to state focus paper prepared by National Bank for Agriculture and Rural Development (Nabard) for 2014-15, credit potential of Rs 1,16,099 crore has been projected for the state, of which more than half (51.87 per cent) is for short-term agricultural operations and crop loan, while another 11.79 per cent for capital formation and long-term investments in agriculture and allied activities.

The focus paper states that the credit potential has recorded an increase of 20.50 per cent in financial year 2014-15 over the previous year 2013-14(Rs 96,344 crore).

The growth is prominent in short-term loans as the year on year growth is about 26 per cent.

This is mainly because banks are providing increasing credit limit under Kisan Credit Card (KCC) towards not only for agricultural operations, but also for consumption requirement, maintenance of farm eqipment and animals. Potential under investment credit for agricultural and allied activities(ATL) has remained AT 18.5 per cent of the total credit potential for agricultural loans in 2014-15.

Year-on-year growth in ATL was 18.66 per cent lower than that for crop loan. The investment opportunities in sectors like irrigation and farm mechanisation are limited due to saturation. Further, rural non-farm sector activities in the state are also not picking up.

According to Nabard focus paper, in Punjab, where farming is being extensively carried out and farm labour is predominately scarce, investment requirement in areas of farm mechanisation, irrigation structure, storage and warehousing facilities, food and processing gets manifold. However, state gross domestic capital formation in agriculture had declined in the past years from 9.49 per cent in 2004-05 to 8.08 per cent in 2009-10 (at current prices).

Perturbed over the problem, Dhindsa asked Nabard to come up with an effective action plan to boost investment in this sector. He also suggested Nabard to come up with a special credit plan for specific problems pertaining to agriculture.

Meanwhile, Nabard launched its focus paper in which it projected a credit flow of Rs 1,16,100 crore under priority sector during 2014-15. This is against Rs 96,344 crore projected during 2013-14.Of Rs 1,16,100-crore projected credit plan for 2014-15, share of crop loan works out to be 52 per cent (Rs 60,220 crore), agricultural and allied sector term loan (investment credit) to 12 per cent (Rs 13,689 crore) and other priority sectors to 20 per cent (Rs 24,004 crore).