Declining agri growth worries DVS

BANGALORE: Expressing concern over the declining growth in the agriculture sector from the targeted 4 to 3 per cent as suggested in the mid-term appraisal of the 11th plan, Karnataka Chief Minister D V Sadananda Gowda strongly felt the need for remedial measures to reverse the trend.Addressing the meeting of Union Finance Minister with Chief Ministers of South Zone states and CEOs of Public Sector Banks and financial institutions here on Sunday, he said the trend will be a major setback for the efforts to achieve inclusive growth, considering that almost two-thirds of the population was dependant on agriculture and allied activities.Inadequate credit flow to the farm sector is one of the several factors which led to lower growth, said the CM, exhorting the stakeholders to ensure more investment in the farm sector.Despite the state government’s pro-active support in the disbursement of farm loans at lower interest, the utilisation of subsidy by the banks has been rather slow, the Chief Minister said. A policy of 40 per cent may be set by the Centre and the RBI to address the persistent problem of under-investments in the farm sector, he said. The GoI and the RBI needs to relook the matter and allow purchase and stocking of fertiliser as part of the priority sector lending.He brought to the notice of the meeting that recently GoI has reduced interest subvention to cooperative institutions on the portion of their own involvement for providing crop loans from the earlier 3 to 1.5 per cent, and urged to reverse the same. He urged the the financial institutions to infuse more credit for the core sectors, including housing, education, SMEs and minorities.The commercial banks are now lending to Micro Finance Institutions at the rate of 14 to 15 per cent for on-lending to SHGs.  As a result, the SHGs are getting loans at an interest of nearly 24 per cent. Borrowings at such a high rate are not sustainable for meaningful income generation activities, he added.While promising co-operation to achieve the goal of financial inclusion in which all villages with population of 2,000 and above would be covered by banks, the CM regretted that the achievement so far was sluggish.He felt the need for customised responses from financial institutions for the southern region which had opportunities, challenges and expectations unique to them, which at times require special solutions.