Ramasubbareddy

Neglect of Farm Credit during 2006-07
Posted by K.Ramasubbaredy
As per data published by the RBI, as on March 2007, Credit given out of deposits collected from rural and semi-Urban areas continues to be less than the percentage of credit deployed in metro areas, indicating continued diversion of deposits from rural and semi-urban areas for giving credit in Metro areas. Had credit been extended to the same extent as in Metros, instead of 56% of deposits received from people in rural and semi-urban areas, additional credit over Rs 1,00,000 crore could have been given in rural and semi-urban areas benefiting mostly farmers and artisans and tiny industries thereby increasing production and income of rural and semi urban people considerably. This benefit was diverted to metro people at the cost of rural and semi urban people. The C/D ratio of NE, Eastern, and Central states is low at 40%, resulting in flow of funds from these regions to western and southern regions. The share of agricultural credit, a productive purpose and essential food supply activity, continues to be low, where as the share of personal loans, consumption based non-productive activity, is twice that of agri credit. Agriculture segment would have got more credit to the extent of Rs 21,000 crore in addition to Rs56,426 crore disbursed, had 18% credit was extended to this segment. Thus lower credit deprived agriculture much needed production and investment loans to which would have helped in augmenting agricultural production.