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It’s Time To Review Priority Sector Lending And Pull Commercial Banks Out Of Risks (The Print)

March 6, 2018

From the article (op-ed by Anit Mukherjee)

One of the key talking points of the recently unveiled federal budget was the Modi government’s focus on the rural economy. Most commentators saw it as a political overture in the run-up to the next general elections.
 
But beyond the politics, does the government have the financial tools needed to significantly revamp the rural sector? More importantly, an evaluation is needed to see if existing tools such as priority sector lending targets are meeting their purpose.
 
The move to benchmark minimum support price on the cost of production for all agricultural commodities will potentially lead to a rise in farm income. The government also promised to substantially increase both the supply of credit and infrastructure investment in the rural sector. For rural credit alone, it has proposed an outlay of $172 billion, a 10 per cent increase from the current year. In terms of the overall projected rural investment of $220 billion, the finance minister stated that over 80 per cent will come from “extra-budgetary and non-budgetary sources”.
 

Read the full article here

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Photo of Anit Mukherjee
Policy Fellow