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Nabard indicates TN's credit potential at Rs.4.13 lakh crore
Chennai | December 2021

Farm credit tops the chart with 39 per cent, says State Focus Paper 2022-23

Nabard's State Focus Paper 2022-23 has indicated an exploitable credit potential of ₹4.13 lakh crore for Tamil Nadu. This is an increase of 20 per cent over the projections made for 2021-22 (₹3.43 lakh crore). The paper, which was released by State Finance Minister Palanivel Thiaga Rajan on Tuesday, was prepared presenting an aggregation of the district level Potential Linked Credit Plans (PLPs).

Of the total credit potential, farm credit tops the chart with 39 per cent; followed by sectors like MSME, export credit, agri infrastructure, and ancillary activities, said T Venkatakrishna, CGM, Nabard, while making a presentation at a seminar on State Focus Paper 2022-23.

The basic objective of assessing the credit potential is through an analysis of sector specific physical potential, infrastructure support, government priorities through various schemes, forward and backward linkages, local skill and natural resources and credit absorption capacity of the sector.

The credit plan is also fine-tuned by factoring in the priorities and the important programmes of the State government, the Government of India, and the Reserve Bank of India. The document serves as a useful reference to provide pointed focus on the development of priority sectors of the State with institutional credit support.

State economy

The Gross State Domestic Product (GSDP) of Tamil Nadu in 2021-22 (at current prices) is projected to be ₹21,36,351 crore, an annualised increase of 7.6 per cent over the GSDP in 2019-20. As per the revised estimates, in 2020-21, GSDP is estimated to increase by 5.3 per cent over 2019-20 (budget estimate was 13.3 per cent).

The State also witnessed an economic downturn in view of the pandemic, however, it has withstood these fierce headwinds and showed a positive growth rate of 2.02 per cent at 2011-12 constant prices in 2020-21. This is against an all-India negative growth rate of 7.7 per cent in 2020-21. Tamil Nadu's economy is expected to bounce back to pre-Covid times with the positive and effective measures initiated by the Government, the paper said.

Number crunching

As against the target of ₹3,00,761 crore for priority sector advances under the Annual Credit Plan 2020-21 for the State, the disbursements stood at ₹3,20,712 crore registering an achievement of 107 per cent.

As on March 31, 2021, the CD ratio of Commercial Banks was 106 per cent as against 110 per cent in the previous year. The CD Ratio of RRBs increased from 99 per cent as on March 31, 2020, to 106 per cent as on March 31, 2021, and that of Cooperative banks dropped from 127 per cent to 103 per cent as on March 31, 2021.

As on March 31, 2021, the gross NPAs in respect of Commercial Banks, RRBs and Foreign Banks under priority sector advances have reduced marginally from 4.71 per cent to 4.24 per cent of the total loan outstanding. The NPAs under agriculture loans to total outstanding loans decreased from 5.36 per cent in the previous year to 4.5 per cent.

The overall priority sector gross NPA has declined from 3.84 per cent as on March 31, 2020, to 0.02 per cent as on March 31, 2021. As regards the gross NPA of Cooperative Banks under agriculture loans, it increased from 3.44 per cent in the previous year to 5 per cent as on March 31, 2021. As on 31 March 2021, the gross NPA of agriculture loans to total loans outstanding stood at 3.97 per cent and the overall priority sectors gross NPA stood at 6.63 per cent, the paper said.

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