The Union agriculture ministry’s data for 2022-23 reveals a persistent gap in agricultural credit flows across different regions. Last fiscal year, agricultural credit to five southern states – Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, and Kerala – amounted to 48% of the total disbursement of Rs 21 trillion, despite the region accounting for only 17% of the country’s gross cropped area.
Conversely, five northern states – Rajasthan, Punjab, Haryana, Jammu & Kashmir, and Himachal Pradesh – received approximately 17% of the total credit flow, amounting to Rs 3.38 trillion for agriculture and allied sectors, against a gross cropped area share of 20%.
In the eastern region – Bihar, Jharkhand, Odisha, and West Bengal – only 8% of the total agricultural credit was received in the year, amounting to Rs 1.73 trillion, despite its cropped area share being 12%. The eight north-eastern states received agri-loans worth Rs 13,406 crore last fiscal, constituting only 0.62% of the country’s disbursement, despite the region having 3.2% of the country’s cropped area.
“North-east, eastern, central and western regions share in agriculture credit does not conform with the respective regions’ share in GCA due to limited credit absorption capacity. The factors such as limited outreach of rural financial institutions, demand side challenges such low financial literacy for low credit offtake,” the agriculture ministry note stated.
In the first three quarters of the current fiscal year, agri-credit disbursement has reached INR 16.37 trillion, out of the targeted INR 20 trillion. In the fiscal year 2022-23, the agri-credit flow surpassed the target of INR 18.5 trillion, reaching INR 21.55 trillion.
To address regional disparities in priority sector credit flow at the district level, the RBI has initiated a ranking system based on per capita credit flow. The central bank emphasizes the need to establish an incentive framework for districts with lower credit flow and a disincentive framework for those with higher credit flow.
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