188
years thus:
`
8,000 crore,
`
8,000 crore and
`
14,000 crore, respectively. If these
three years data are to be treated as the yardstick , the difference between the
defaults in priority sector credit and the amounts allocated to the RIDF, has
been over 60% each year (or under each tranche).
We do not have such accurate data on the estimated sizes of farm credit
defaults for recent years when, it should be admitted, there have been reductions
in defaults as well as increases in RIDF Corpus allocations. Even so
a priori
indications are that the gap between the two has further widened because of the
higher base of bank credit operations. We have attempted a tentative estimate
of the possible defaults in agricultural credit based on banks’ performance in
priority sector dispensation for three years ending March 2010, March 2011
and March 2012.
Again, except for two years 2009-10 and 2010-11 for which the
preceeding years’ default data appear suspect, the tentative estimates made
here show that the difference between the defaults in agricultural credit target
and the amounts allocated to RIDF has been about 65% in 2010-11 and 79%
in 2011-12.
The implication of the above differences is that RIDF has turned out
to be an insufficient measure to induce banks to set aside 18% of their net
bank credit to agriculture directly or indirectly through rendering support for
rural infrastructural development. The system appears to adopt a lukewarm
approach to introducing effective instruments of incentives and disincentives for
goading banks to fulfil the credit targets, let alone adopting punitive measures
Table 6.4: Tentative Estimate of Agricultural Credit Default and RIDF
Allocations for Public and Private Sector Banks
Year-End
Amount of Agricultural Credited Defaulted
@
RIDF
Allocations
For Next Year
Difference
Public Sector Bank PrivateSector Bank Total
2008-09
6,805
-
6,805
14000*
2009-10
2,081
-
2,081
16000*
2010-11
37,726
13,498
51,224
18,000
33,224
(64.9)
2011-12
66,640
26,961
93,601
20,000
73,601
(78.6)
@
Derived indirectly from the data on priority sector performance presented in RBI's publication
Report on
Trend and Progress of Banking in India, 2010-11
(p.85) and 2011-12 (p.75)
* Data reported on priority sector targets appear suspect as RIDF allocations made in succeeding years are
considerably higher than the credit target defaults.
(Figures within brackets are percentages of difference over the sizes of credit defaulted)
