NABARD estimates TN priority sector credit outlay at Rs 1.71 lakh cr in FY17

Declining achievement in lending to agriculture is a matter of concern, says NABARD's State Focus Paper

The potential credit outlay for the priority sector for the State of Tamil Nadu for the year 2016-17 is estimated as Rs1,71,154.73 crore, with an increase of 18 per cent over the projections of the previous year, according to the National Bank for Agriculture and Rural Development (NABARD).

In a State Focus Paper for 2016-17, for Tamil Nadu, the Bank has said that there is a 15 per cent growth in Potential Linked Credit Plan (PLP) 2016-17 estimates as against Base PLP projections of Rs 1,49,231.37 crore for 2016-17.

Delivering his presidential address while releasing the Focus Paper, K Shanmugam, additional chief secretary, finance, Government of Tamil Nadu, said that the banks should create awareness among the farmers on various aspects including how to improve the value of crops within the limited available area, need and opportunity of cultivating various crops including pulses and the requirement of value addition post harvesting.

"The increase is on account of factors like GoI policies and priorities, cost escalation, revision in unit costs of various investment activities, change in priority sector lending guidelines, Scale of Finance (SOF) for lending under crop loans and infrastructural changes at the district level so that the realistic costs are adopted for arriving at the exploitable potential both in physical and financial terms," according to the Paper.

It said that the ground level credit flow during 2012-13, 2013-14 and 2014-15 was Rs 86,907 crore, Rs 1,09,270 crore and Rs 1,26,545 crore respectively, thus registering an increase of 42 per cent and 15 per cent during the last two years. During 2014-15, under agriculture, the crop loan witnessed an increase of 11 per cent while agriculture term loan registered an increase of 42 per cent over previous year. The disbursement under MSE and others registered an increase of 18 per cent and 17 per cent respectively.

Out of the credit potential envisaged for the year 2016-17, the share of agriculture credit, MSME and other priority sector has been estimated at Rs 1,09,385.56 crore, Rs 31,592.32 crore and Rs 30,176.85 crore, respectively. The credit projection for 2016-17 marks an increase of 18 per cent over the same at Rs 1,44,435.55 crore, earlier estimated for the current year (2015-16).

The projections for 2016-17 under crop loan has been estimated at Rs 68,934.45 crore. The ground level credit flow to this sector was Rs 67,400.64 crore during 2014-15 as against the target of Rs 53,456.45 crore, an achievement of 126 per cent. The projections for 2016-17 under water resources has been estimated at Rs 3,086.38 crore. The ground level credit flow to this sector was Rs 1,289.41 crore during 2014-15 as against a target of Rs 3,232.16 crore, the achievement being 40 per cent, added the Bank.

The projections for 2016-17 under Farm Mechanization has been estimated at Rs 7,416.80 crore. The ground level credit flow to this sector was Rs 1,280.38 crore during 2014-15 as against the target of Rs 4,160.32 crore, which is a 31 per cent achievement.

Elaborating on the performance during the earlier years, it said that as against the target, for the year 2014-15, Rs 1,21,900.66 crore under the Annual Credit Plan, an amount of Rs 1,26,544.70 crore was disbursed for various sectors, recording an achievement of 104 per cent. The Banks disbursed Rs 81,630.34 crore to the agriculture sector against the target of Rs 77,513.57 crore (105 percent achievement), showing a marginal decline in percentage achievement as compared to an achievement of 108 per cent of the target during 2013-14.

Declining achievement in lending to agriculture is a matter of concern, it said. The Non Peforming Assets under agriculture loans has gone up in absolute term, from Rs 3,073.92 crore as on March 31, 2014 to Rs 4,375.06 crore as on March 31, 2015. This is a decline as a percentage from 2.86 per cent to 3.63 per cent. The overall priority sector NPAs has been on the increasing trend over the last three years in absolute figures. It increased from Rs 8,802 crore as on March 31, 2013, to Rs 9,200 crore as on March 31, 2014 and to Rs 14,241 crore as on March 31, 2015, it added.

The banking network in the State, as on March 31, 2015, comprised of 45 Commercial Banks, two regional rural banks and Tamil Nadu State Apex Cooperative Bank (TNStCB) with 23 affiliated District Central Cooperative Banks (DCCBs). Banking services in the State are provided through a network of 10326 branches, of which 6619 branches comprised rural/semi urban branches.