Farm credit stagnant in Punjab for 3 yrs

Source: The Tribune | Title: Farm credit stagnant in Punjab for 3 yrs

Vijay C Roy

Tribune News Service

Chandigarh, May 3

Despite high concentration of banks in Punjab, credit growth to farm sector is almost stagnant in the past three years.

According to data, it witnessed a compound annual growth rate (CAGR) of 0.84% from FY18 to FY20. The state has over 6,300 bank branches comprising public, private, cooperative and regional rural banks.

According to National Bank for Agriculture and Rural Development (Nabard), decline in investment credit to agriculture and low offtake to mechanisation are some of the reasons behind low credit growth.

As per data, the total credit flow to agriculture sector was Rs 86,790 crore in FY18. In FY19, it saw a marginal hike with offtake touching Rs 88,344 crore. In FY20, total credit flow to the farm sector was Rs 88,977.

“Investment credit to the farm sector is declining which is one of the reasons for stagnation in credit growth. Secondly, bankers have a misconception that agriculture mechanisation and other investment opportunities have reached a saturation point. That’s why credit growth is stagnant. However, there are a lot of opportunities in precision farming, dairy farming and horticulture. These are the areas which require support from the banking side,” said Dr Rajiv Siwach, CGM, Nabard, Punjab Regional Office.

Investment credit leads to capital formation in agriculture through asset creation. It induces technological upgrade resulting in increased production and incremental income to farmers and entrepreneurs. It intends to create income-generating assets in sectors such as agriculture and allied activities. A decline in investment credit also leads to decline in farmers’ income.

Read More | Source: The Tribune

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