Financial Daily from THE HINDU group of publications
Friday, Dec 20, 2002
Money & Banking
Agri-Biz & Commodities - Farm credit
Nabard pegs Karnataka's credit potential at Rs 9,729 crore
BANGALORE, Dec. 19
THE National Bank for Agriculture and Rural Development (Nabard) has estimated a rural credit potential in Karnataka of Rs 9,729 crore for the year 2003-04, up from Rs 9,265 crore in 2002-03.
The Chief General Manager, Nabard, Bangalore, Mr S.M. Mehta, said that of the estimated potential, Rs 6,225 investment was expected in agriculture and allied activities and Rs 3,500 in the non-farm sector.
Farm mechanisation, minor irrigation, plantation and horticulture and animal husbandry were identified as areas with the maximum potential for development.
The trend in credit to capital formation activities in agriculture was `disturbing' and even `alarming', Mr Mehta said. Given the national policy that envisages a doubling of production by 2003, there was a need to increase credit for capital formation, he said.
According to Nabard, Rs 360 crore (25 per cent of term loan) had been estimated as the requirement in this area.
The requirement for minor irrigation was Rs 246 crore and for horticulture and plantation was Rs 242 crore. "There has been a negative growth in plantation crops such as coffee and arecanut," Mr Mehta said.
Floriculture was looking brighter and banks can come forward to support the industry, he said. "There has been Central assistance for coffee and arecanut, but banks need to ask if it is adequate," the Chief Secretary and Development Commissioner, Mr B.S. Patil, said.
They also need to look at whether these sectors require long-term loans or short-term ones, he said.
The State has made heavy investments in major irrigation, but the returns have not been commensurate, he said. For instance, the UKP project was supposed to irrigate 8-10 lakh hectares but only 3 lakh hectares are being irrigated. This implies that utilisation of water resources is poor, he said.
With the new law in place for asset reconstruction companies to recover loans from wilful defaulters, banks would be able to give credit more freely without fear of running up NPAs, Mr Mehta said.
Nabard has assisted the State Government to the tune of Rs 1,705 crore for RIDF (Rural Infrastructure Development Fund) for road, bridge and irrigation projects. Other areas that required credit included crop insurance, and retail mechanisms for rural youth to enter non farm areas.
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