Bristling with glass towers and commercial districts, Mumbai is unquestionably the financial capital of India. The most greenery an average Mumbaikar can hope to grow is a few herbs in window flower-pots.
Which is why it seems strange that the city will the biggest beneficiary of agriculture loans, as projected by the National Bank for Agriculture and Rural Development (Nabard) for the fiscal year 2016-17.
The State Focus Report for 2016-17, released by Nabard last week, allocated 51.3 per cent (of Rs 2,96,279.44 crore) of its total potential-linked credit plan (PLP) to Mumbai City and Suburbs.
Set up by an act of Indian Parliament in 1982, Nabard’s corporate mission is to ‘Promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.’
Nabard's report will be used by the Bank of Maharashtra, the convener of state-level banker’s committee, to devise the state's credit plan. Simply put: decisions on loan disbursals will be based on the Nabard report’s projections.
The report emphasises that it is the poor and vulnerable groups that should have access to safe, easy and affordable credit and other financial services “in disadvantaged areas.”
It also notes that easy credit to lagging sectors is a precondition to accelerate growth and reduce income disparities and poverty.
How does this explain the focus on Mumbai?
Dr US Saha, Chief General Manager, Nabard-Maharashtra, explained that the projections are not only for crop loans, but include total priority-sector lending. Dr Saha accepted that Nabard’s primary focus should always remain on agriculture and agreed that Mumbai does not have agriculture. but the city does, he says, have “a number of MSMEs [micro, small and medium enterprises], food and agro-processing units, housing and social infrastructure projects. If you exclude Mumbai’s projections from total estimated credit plan, the amount planned for areas affected by agrarian distress will be seen to be evenly distributed.”
Rural activists are not amused. “Does the focus report follow Nabard’s real mandate?” asked Vijay Jawandhia, farmers’ leader from Vidarbha. “We propose investment where we need development. Are there any special projections for drought-affected areas? The projections should be to provide incentives to set up agro-industries in less developed regions such as Marathwada and Vidarbha. Repeated neglect is increasing the already existing backlog of these regions. Instead we are again focusing on Mumbai, that already has enough money.” Mr Jawandhia added that loans allotted to industries in Mumbai will be under the agriculture loan label, which carries a number of benefits, like lower interest rates.
The disparity in projected loan shares goes beyond Mumbai. As per the report, after excluding the funds projected for Mumbai, estimates of PLPs for Marathwada and Vidarbha are just 16.48 per cent and 16 per cent reseptively. Western Maharashtra, comparatively wealthier, and a region which has not faced drought and of farmers’ suicides, gets 44 per cent.
While industry and service sectors are estimated to be contributing 88.7 per cent of state’s total domestic product, agriculture and allied sector contributes only 11.3 per cent.