New Delhi: With Lok Sabha elections in 2019, Union finance minister Arun Jaitley on Monday urged the banks to achieve the target of agriculture lending of Rs 11 lakh crore in 2018-19. In the annual address to Board of National Bank for Agriculture and Rural Development (NABARD), Mr Jaitley said that the agriculture credit flow target of Rs 11 lakh crore for the financial year 2018-19 is achievable by the banking sector and would add to the momentum towards doubling the farmers’ income by 2022.
He also reviewed the funds announced in the earlier Union Budgets and stressed the need for all the stakeholders to collaborate to improve the farmers’ income.
Mr Jaitley emphasised that the banking sector must invest in long term assets to improve the capital formation in agriculture sector. He further stated that the investments in financial technology over the past few years have brought in efficiency, speed and transparency in the rural financial ecosystem.
BJP has been trying to woo farmers after performing poorly in rural areas in the Gujarat elections. Winning the support of farmers, rural Indian and urban poor is crucial for the BJP in view of assembly election in 8 states in 2018 and 2019 polls. There has been farmers unrest in other states too including UP, Maharashtra and Gujarat.
In the Union Budget, Mr Jaitley has announced that all crops of will get a minimum support price (MSP) at least at one-and-a-half times the cost involved as promised in BJP’s poll manifesto. He hiked the budget allocation for the agriculture ministry by 13 per cent to Rs 58,080 crore and raised farm credit target by Rs 1 lakh to Rs 11 lakh crore for 2018-19.
Finance minister had also allocating $225.5 billion for rural infrastructure in the Budget. Department of financial services secretary Rajiv Kumar asked the banking system to concentrate on geographical areas like North East, East and Central India where the formal credit can give a fillip to the growth potential these areas offer.
Q3 growth likely to hit 7 per cent
India’s GDP is expected to pick up in the third quarter (Q3) of FY18 indicating turnaround in the economic growth. DBS Economics said it expects that a rebound in real GDP growth to 7 per cent in Q3 from Q2’s 6.3 per cent. “Lead indicators have been encouraging, with urban consumption recovering into the year-end, whilst rural consumption moderated. PMIs recovered from the post-GST lull, along with a jump in industrial production, primarily capital goods output,” it said.
In July-September, the economy grew 6.3 per cent annually, a return to a faster growth trajectory after five consecutive quarters of slowdown. Rating agency Icra said the gross value added (GVA) growth is likely to improve to 6.8 per cent in the third quarter, helped by an improvement in the services and industrial sectors. In the second quarter, GVA growth was at 6.1 per cent.
“We expect GVA growth at basic prices in year-on-year terms to print a sequential recovery of 6.8 per cent in third quarter led by the services (at 8.8 per cent from 7.1 per cent) and industry (at 6.8 per cent from 5.8 per cent), even as growth of agriculture, forestry and fishing (to 1.5 per cent from 1.7 per cent) is likely to ease,” Icra said.
Headline GVA growth in Q3 is likely to mildly exceed 6.7 per cent printed a year-ago. During the first half of this fiscal, economic activity remained muted, partly on account of the structural transition to GST, but signs of a pick-up in growth are starting to appear. Icra’s principal economist Aditi Nayar said higher growth in volumes in manufacturing and some of the services sub-sectors and in the government’s expenditure, a favourable base effect and an improvement in corporate earnings are expected to contribute to a sequential recovery in the y-o-y growth of GVA at basic prices in Q3. Growth in the services sector is likely to record a base-effect led pick-up to nearly 8.8 per cent in Q3 from 7.1 per cent in the second quarter.
