Bank Credit Offtake Bares Heavy Food Tilt

The composition of credit offtake from the banking industry has skewed drastically in favour of food credit.

According to the latest data available from the Reserve Bank of India, food credit accounts for close to 60 per cent of the total credit offtake in the first five months of the current fiscal.

Of the aggregate credit offtake of Rs 17,389 crore, food credit was Rs 10,347 crore, accounting for 59.5 per cent, while non-food credit, at Rs 7,042 crore, accounted for the rest.

In contrast, food credit offtake in the corresponding period of the last year was Rs 6,944 crore, accounting for 26.39 per cent of the gross credit offtake of Rs 26,307 crore.

During the first five months of fiscal 2001, non-food credit offtake was to the tune of Rs 19,363 crore accounting for 73.60 per cent of the gross credit offtake.

Thus, in absolute terms, food credit offtake during the first five months of the current fiscal is 49.5 per cent higher than in the same period last year. But the distinct shift in the composition of total credit is because food credit has grown at a faster pace than non-food credit.

Analysts said while increased food credit offtake reflects a better agricultural outlook, the slower growth in non-food credit is a result of the industrial slowdown.

The agriculture sector, registered a 0.2 per cent growth in the last financial year, but backed by a better distribution of rainfall in the current financial year, analysts are expecting it to grow by about 7 per cent.

In the current fiscal till September, 85 per cent of the gross cropped area received normal to excess rains. The distribution was very uneven last year when 61 per cent of the gross cropped area received adequate rains.

The industrial growth, however, continued to remain lacklustre. The index of industrial production (IIP) grew by only 2.6 per cent year-on-year in July this year compared with a five per cent growth during the corresponding period of the last year.