Effects of drought visible in loan demand in rural Maharashtra, urban sectors unaffected

In its meeting of January 2024, State Level Banking Conference(SLBC)---the apex body of bankers in the state---reported lower than expected farm credit reaching farmers.

SLBC officers, who spoke to The Indian Express, pointed out that the agriculture lending to Micro Small and Medium Enterprises (MSME) have not been hit. (Express file photo)

Maharashtra’s drought and failure of monsoon has resulted in lower than expected rural credit reaching farmers. With the general election and the assembly elections scheduled later this year, drought and its effect would be playing out large in the rural parts of the country.

In its meeting of January 2024, State Level Banking Conference (SLBC)—the apex body of bankers in the state—reported lower than expected farm credit reaching farmers. Banks were given a target of Rs 1,68,481 crores to be disbursed as loan for agriculture for the 2023-24 fiscal. But till September 2023, only Rs 88,881 crores was disbursed, which roughly estimates to 53 per cent of the target.

This is drop from the 57 per cent of the target disbursal banks had reported in September 2022, when the target was Rs 1,26,061 crores and lending was Rs 71,742 crores.

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Lending to agriculture sector in terms of crop loan is included in the priority sector lending for banks. At the start of the cropping cycle , farmers are given loan to finance their needs for inputs, labours etc at economical rates. Farmers can get crop loan upto Rs 3 lakhs at no interest if they are repaid within 11 months.

SLBC officers, who spoke to The Indian Express, pointed out that the agriculture lending to Micro Small and Medium Enterprises (MSME) have not been hit. “Till September 2023, banks lent 68 per cent of the total sanctioned amount to the MSME as against 62 per cent reported in September 2022. This shows that unlike agriculture, the MSMEs which are mostly in the urban or semi-urban areas have not been hit by the drought,” said the officer.

That the drought is taking a toll on the finances in the rural sector is also evident from the increase in the amount of outstanding or unpaid loans in the agriculture sector. SLBC’s report shows that Rs 2,21,648 crores is outstanding in agriculture sector as of September 2023, which was Rs 1,89,299 crores in September 2022.

Parthasarathi Biswas

Partha Sarathi Biwas is an Assistant Editor with The Indian Express with 10+ years of experience in reporting on Agriculture, Commodities and Developmental issues. He has been with The Indian Express since 2011 and earlier worked with DNA. Partha's report about Farmers Producer Companies (FPC) as well long pieces on various agricultural issues have been cited by various academic publications including those published by the Government of India. He is often invited as a visiting faculty to various schools of journalism to talk about development journalism and rural reporting. In his spare time Partha trains for marathons and has participated in multiple marathons and half marathons. ... Read More

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