UP rural credit pegged at Rs 2 lakh cr in 2017-18

Credit potential up 17% amid talks of farm debt waiver in UP

Even as the Yogi Adityanath government in Uttar Pradesh (UP) is yet to spell out its blueprint for the promised farm debt waiver, the National Bank for Agriculture and Rural Development (NABARD) has pegged UP’s composite rural credit potential at over Rs 2,07,000 crore during 2017-18.

This projection, which constitutes UP's Potential Rural Credit Plan, is almost 17 per cent higher than the corresponding figure of about Rs 1,78,000 crore estimated for the current 2016-17 financial year, thereby implying greater credit flow to the state's rural economy and capital formation in the farming and allied sectors.

The farm loan waiver was one of the flagship pre-poll promises of the ruling Bharatiya Janata Party in the run up to the 2017 UP Assembly polls.

Currently, the outstanding debt is estimated at over Rs 50,000 crore in UP. However, the state government is authorised to waive loans extended by state cooperative banks, whose total outstanding is roughly 20 per cent of total farm loan advances, at about Rs 10,000 crore.

Loans extended by commercial banks fall outside the purview of the state government, unless the concerned state makes additional allocation in subsequent budgets to underwrite these advances or to take over such loans on its books.

Meanwhile, the state's credit flow projection was higher at 25 per cent for 2016-17 vis-à-vis the previous financial year, when the credit plan was pegged at about Rs 1,43,000 crore. (See Table)

In its latest State Focus Paper, NABARD has projected total credit potential of Rs 2,07,903 crore during 2017-18 for crop production, animal husbandry, fisheries, water resources, plantation and horticulture, rural infrastructure, renewable energy, rural housing, export and education etc.

UP Minister of State (Independent Charge) Swati Singh, who also holds the portfolio of agriculture marketing among other departments, has announced that the state agricultural marketing board (Mandi Parishad) would explore the possibility of collaborating with NABARD for enhancing farmers’ income.

Meanwhile, NABARD Chief General Manager A K Panda has urged the government to waive the e-mandi license fee for Farmers Producers Organisations and advocated seed capital support for the organisation in the backdrop of the central government’s target to double farmers’ income by 2022.

The State Focus Paper, which contains the projected outlay for the next financial year, entailed the aggregate credit potential under different sectors of the economy, both farm and non-farm, the status of infrastructure under each sector or sub-sector and critical gaps in different districts.

Under Reserve Bank of India's guidelines, this is part of the decentralised credit planning undertaken by NABARD through a consultative process to estimate credit potential in various sectors of the economy.

Depending upon this plan, the commercial banks prepare the annual credit plan for UP, fixing individual bank targets under the Lead Bank Scheme.

SI No.	Financial year	UP Rural Credit Plan	Percentage increase
1	2012-13	Rs 79,988 crore	25
2	2013-14	Rs 1,01,315 crore	21
3	2014-15	Rs 1,22,000 crore	20
4	2015-16	Rs 1,43,406 crore	18
5	2016-17	Rs 1,78,000 crore	25
6	2017-18	Rs 2,07,000 crore	17

Source: NABARD and complied by Virendra Singh Rawat