BS Samriddhi 2024: UP's priority sectors need Rs 5.73 trn lending in FY25

The growth marks 50% increase in credit flow year-on-year

Signaling a major boost to the $1 trillion economy target of Uttar Pradesh, the priority sector credit flow is estimated to touch Rs 5.73 trillion in the current financial year 2024-25 (FY25), marking an over 50 per cent growth year-on-year.

 

The credit flow in FY24 was about Rs 3.75 trillion.

 

According to UP government estimates, the state needs growth of 250 per cent, 300 per cent and 450 per cent in the agricultural, Micro, Small and Medium Enterprises (MSME) and services sectors respectively to achieve its $1 trillion goal.

 

In this context, the Yogi Adityanath government in the state has been nudging banks to improve upon the UP Credit Deposit (CD) ratio.

 

 

Against a CD ratio of 47 per cent in 2017, the UP CD ratio touched 60 per cent in FY24. Now, the state government is aiming to achieve a CD ratio of 65 per cent by the end of FY25.

 

CD ratio refers to the money given as loans by banks vis-à-vis funds raised by them. A high CD ratio indicates liquidity and easy availability of funds for industry.

 

Meanwhile, according to the UP State Focus Paper 2024-25 prepared by the National Bank for Agriculture and Rural Development (NABARD), the agricultural and MSME sectors would account for loans worth Rs 2.46 trillion and Rs 2.92 trillion respectively in FY25.

 

The agricultural loans would represent a growth of 6 per cent over last year. On the other hand, MSME loans would see an uptick of 178 per cent from Rs 1.05 trillion in 2023-24 to Rs 2.92 trillion in 2024-25.

 

Moreover, to boost private investment and propel UP as a preferred investment destination, the Yogi government has tasked officials with attracting investment and improving the CD ratio.

 

Under the plan, senior bureaucrats holding the charge of divisional commissioners and district magistrates (DMs) in UP will earn positive remarks in their annual confidential reports (ACR) on the basis of investments. There are 18 administrative divisions and 75 districts in the state.

 

According to UP Chief Secretary Manoj Kumar Singh, the innovative step is aimed at instilling accountability in bureaucracy and nudging for investments and boosting credit offtake.

 

“This unique approach will hold the DMs and commissioners accountable for their efforts in promoting investment and facilitating an amenable climate of economic growth,” Singh added.

 

Under the proposed policy, the officials will actively promote business facilitation measures such as investors’ safety, land allotment, ease of doing business and single window clearances.

 

At the state level, the respective IAS officers’ performance will be monitored. This will reflect in their ACRs, and have a direct correlation on their future growth prospects.

 

Besides this, owing to a rapid improvement in the overall business climate and pro-industry stance, the UP CD ratio has shown consistent improvement in the last few years.

 

Andhra Pradesh, Telangana, Tamil Nadu, Maharashtra, Gujarat and Karnataka are the leading states in the country in terms of CD ratio.

 

Keeping pace with industrial development, the state has also made remarkable progress in the agriculture and allied sectors, which is also fueling the credit growth.

 

The state is looking to launch special initiatives in those districts which have a low CD ratio. The concerned DMs and commissioners have been asked to formulate investment strategies in this respect.

 

Meanwhile, the government is also catalysing the agricultural, MSME, manufacturing and services sectors to boost institutional lending in the state.

 

The MSME sector contributes 60 per cent to UP’s industrial output. While the MSME exports are currently to the tune of over Rs 1.5 trillion, the state is targeting to double shipments to Rs 3 trillion in the next 2-3 years.

 

For farm job creation and equitable growth, UP has announced to groom 1,000 startups focused on emerging farm technologies.

 

The state has collaborated with global financial and tech majors like International Finance Corporation (IFC), World Bank and Google to fortify the agricultural and allied sectors, and leverage cutting edge solutions based on Artificial Intelligence (AI) and data analysis.

 

These initiatives are expected to generate nearly a million new employment opportunities for the rural youth in UP. The targeted 1,000 startups would encompass agricultural production, marketing, packaging, processing and storage to augment rural earnings.

 

The state is aggressively promoting agri-startups and integrating AI into farm practices to elevate UP’s rural economy through “smart farming” and “digital agriculture”.

 

The government has envisioned developing a robust $10 billion worth of agri-tech economy in five years.

 

The agri roadmap is expected to engender transformative results to benefit farmers as well as boost domestic and global food security, a government spokesperson said.

 

UP is assiduously positioning agriculture as a modern, high-tech, profitable and sustainable industry going forward with adequate credit flow and doorstep banking services.

 

Further, the state is promoting collaboration between agri-tech companies and farmer producer organisations (FPOs) for the adoption of latest technologies.