Sunday, 15 July 2012

5 Lakh crore gamble

Banks have disbursed over Rs 5 lakh crore credit to the farmers during last fiscal as against the target of Rs 4.75 lakh crore. Still the GDP numbers for agri sector growth remains meagre at 2.7%. Same amount of investment/credit in any other sector would propel growth of around 8%-10%.
                Reason for such low growth..??? The money is getting diverted by end users to non farm sectors. Many farmers have bought private vehicles, consumer electronics goods & things of leisure using this credit. Many know they do have to return the loans they have received from banks considering previous loan waivers from government. with small lands sizes , poor irrigation , low market rates many farmers have opted for same.
               Already Dr. Subba Rao has pressed the panic button as NPA have risen by 50% for loans given to agriculture sector. The GOI seems ready to take another huge write off in 2014 (election year).

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