Maharashtra is grappling with the consequences of a drought and a monsoon failure, affecting the state’s rural credit landscape. The State Level Banking Conference (SLBC), the apex body of bankers in Maharashtra, revealed in its January 2024 meeting that farm credit disbursement fell below expectations.
For the 2023-24 fiscal year, banks were assigned a target of Rs 1,68,481 crores for agricultural loans. However, by September 2023, only Rs 88,881 crores had been disbursed, accounting for approximately 53% of the target. This decline marks a noticeable drop from the 57% disbursement reported in September 2022 when the target was Rs 1,26,061 crores, and lending reached Rs 71,742 crores.
MSMEs Show Resilience Amidst Drought
While farm credit faced a setback, lending to Micro Small and Medium Enterprises (MSMEs) exhibited resilience. SLBC officers noted that, by September 2023, banks had lent 68% of the total sanctioned amount to MSMEs, compared to 62% reported in September 2022. The data suggests that unlike agriculture, MSMEs, primarily situated in urban or semi-urban areas, have not been significantly impacted by the drought.
Financial Strain in Rural Sector
The drought’s toll on rural finances is further evident in the increase of outstanding or unpaid loans in the agriculture sector. SLBC’s report indicates that the outstanding amount in the agriculture sector rose to Rs 2,21,648 crores as of September 2023, compared to Rs 1,89,299 crores in September 2022.
As Maharashtra grapples with the aftermath of drought, the agricultural sector faces challenges in meeting credit targets, while the MSME sector demonstrates resilience in the face of adverse climatic conditions.
