House Panel To Meet Bankers On Agriculture Loans Tomorrow

Mumbai, May 22: | Updated: May 23 2003, 05:30am hrs
A high-level, 50-member Parliamentary Committee on agriculture is in Mumbai to assess the existing system of credit flow to the agriculture sector as also to the food processing industry. The study team, led by DMKs Palani Manickkam, will be in the city till Saturday.

On Saturday, the team members are expected to meet the Reserve Bank of India (RBI) governor Bimal Jalan, chairmen of five nationalised banks and top officials of the National Bank for Agriculture and Rural Development (Nabard). The five banks are: State Bank of India (SBI), Central Bank of India (CBI), Bank of India (BoI), Bank of Baroda (BoB) and Union Bank of India (UBI).

After visiting Mumbai, the team is also expected to visit farmers in various other states and assess their credit requirements.

Based on the studies from these visits, the team is expected to prepare a report by early next year. The report would form the basis for possible budgetary support for agriculture during 2004-05.

The investment needs of the agriculture sector for the 10th Five Year Plan, as estimated by the Expert Committee on Strengthening and Developing of Agricultural Marketing, are to the tune of over Rs 2.5 lakh crore, of which Rs 1,50,000 crore are for setting up infrastructure for food processing.

However, according to the chairman of a leading bank, there appears a bias in favour of financing industry and avoiding agriculture. This perhaps could be due to the perceived high risks and high transaction costs in financing agriculture.

As per the assessment of the task force for the 10th Five Year Plan (2002-07), around Rs 81,000 crore would be required during 2002-03 for strengthening the agriculture sector. Estimates indicate that around Rs 75,000 crore have been extended, but actual figures could be less than this figure, a source said.

An analysis of credit flow indicates that finance flow to the agriculture sector has been low as compared with other sectors.