THE district potential linked credit plan (PLP) for Punjab prepared by Nabard for 2008-09 projects that the total priority sector credit need would be to the tune of Rs 41,664.16 crore. Of this, 53% or Rs 22,298.52 crore will be crop loan, term loans to the agriculture and allied sector would be 11% or Rs 4,584.90 crore with the total agriculture sector needing Rs 26,883.42 crore while projections for the non farm sector are Rs 6,095.45 crore or 15% and the other priority sector 21% or Rs 8,685.27 crore.
In the current fiscal, as per data available with Nabard, the target for the current fiscal is Rs 30,424.02 crore. However, the achievement for the first half of 2007-08 up to September last is Rs 14,415.97 crore against the half yearly target of Rs 14,552.68 crore. Of the total target of Rs 30,424.02 crore for the current fiscal the target under crop loan is Rs 16,703.55 crore, term loans to agriculture and allied sector Rs 3,811 crore taking the total credit needed by the agriculture sector to Rs 20,546.75 crore. The target for the non farm sector is Rs 4,464.59 crore and other priority sector Rs 5,412.67 crore.
According to the Nabard status focus paper Punjab 2008-09, the total priority lending during 2006-07 stood at Rs 28,824 crore as against Rs 24,211 crore in 2005-06 thereby registering a growth of 19% as against 31% recorded in 2005-06.The lending in 2004-05 was of the order of Rs 18,459.50 crore.
The paper points out that the commercial banks play a dominant role in the lending under the priority sector. Around 70% of the total disbursement is shared by commercial banks only. On the other hand, the cooperative sector which is traditionally being associated with agriculture loans has witnessed a decline in its share. However, the share of the regional rural banks (RRBs) has remained around 20.5%.
Crop loan registered an increasing growth rate during the past three years and constituted 51% of the total credit flow under priority sector lending and 77% of total agricultural credit during 2006-07.
Agriculture term loan has improved its share from 13.25% in 2005-06 to 16% in 2006-07 of the total priority sector lending. Though this is a welcome trend however, this level of investment credit under agriculture is still far short of a level that would make the agriculture sector grow somewhere near 4 %.
Under non farm sector, the credit flow increased marginally by one per cent to 15 % in 2006-07 from 14% in 2005-06 of the total priority sector lending.Non farm sector has huge potential to provide supplementary source of income to farmers and its checks the exodus from rural area.
On the other hand,the credit flow under other priority sector though increased in absolute terms, its growth has declined by one per cent to 18% in 2006-07 from 19% in 2005-06.
The paper states that rural indebtedness continues to be a serious problem among Punjab peasantry. According to NSSO (2005) estimates, Punjab has the third largest extent of indebtedness in India ( 65.4%) after Andhra Pradesh and Tamil Nadux. Moreover, the magnitude of indebtedness is the highest in India with per household indebtedness at Rs 41,576. Punjab farmers used 62.4% of the outstanding loans in agriculture. One of the reasons for higher consumption loans is lack of social security schemes which expose farmers to the risk of falling into vicious circle of permanent indebtedness.