Bihar’s farmers and rural businesses can rejoice! The National Bank for Agriculture and Rural Development (NABARD) has projected a massive credit potential of ₹2,43,093 crore for the state in the coming financial year (2024-25). This means there’s a good chance of banks lending this amount to support agriculture, allied activities, and rural development projects in Bihar.
How Did NABARD Arrive at This Number?
NABARD considers several factors when estimating credit potential. Here are some key ones:
- RBI Guidelines: The Reserve Bank of India (RBI) sets specific targets for banks to lend to priority sectors like agriculture, small businesses, and weaker sections. NABARD’s projection takes these guidelines into account.
- Government Policies: Central and state government schemes that promote agriculture and rural development are factored in. These schemes often provide subsidies or incentives, making it more attractive for banks to lend in these areas.
- Sustainable Practices: NABARD emphasizes credit for initiatives that promote sustainable agriculture and eco-friendly practices.
Why is Credit Important for Bihar’s Development?
Easy access to loans is crucial for Bihar’s economic growth. Here’s how:
- Supports Farmers: Loans can help farmers buy seeds, fertilizers, equipment, and invest in irrigation. This can lead to better yields, improved income, and overall agricultural development.
- Boosts Rural Businesses: Loans can finance small businesses in villages, like setting up processing units for agricultural produce or starting handicraft ventures. This creates jobs and strengthens the rural economy.
- Infrastructure Development: Loans can be used for building rural infrastructure like roads, warehouses, and irrigation canals. This improves connectivity, reduces wastage, and facilitates agricultural growth.
Challenges to Consider
While the credit potential is promising, there are challenges to overcome:
- Low Credit-Deposit Ratio: As of March 2023, Bihar has a Credit-Deposit (CD) Ratio of 53.01%, which is on the lower side. This means banks collect more deposits from Bihar than they lend within the state. Efforts are needed to encourage banks to lend more in Bihar.
- Financial Literacy: Many farmers and rural entrepreneurs may not be aware of loan schemes or lack the knowledge to apply for them. Financial literacy initiatives can help bridge this gap.
Looking Ahead
The projected credit potential by NABARD is a positive sign for Bihar’s economic development. By addressing the challenges and ensuring proper utilization of these funds, Bihar can empower its farmers, strengthen its rural economy, and pave the way for a more prosperous future.
