Despite adequate liquidity in the banking system to support a credit pick up, a 27 per cent plunge in offtake by farm sector slowed down lending by banks during 2003-04, the pre-Budget Economic Survey said on Wednesday.
The Survey, tabled in Parliament, found that the total bank credit grew at 14.6 per cent during the previous year, lower than 16.1 per cent in 2002-03.
Economic Survey 2003-2004: Complete Coverage
The gross bank credit, according to the Survey, stood at Rs 7,64,383 crore (Rs 7643.83 billion) during 2003-04.
Both food and non-food credit growth during 2003-04 was a notch lower than that during the previous year, it said.
The decline in food credit to Rs 35,961 crore (Rs 359.61 billion) during the previous year was mainly on account of lower procurement and higher offtake of foodgrains, it said.
Food credit during 2002-03 stood at Rs 49,479 crore (Rs 494.79 billion), it added.
The non-food credit, which remained subdued in the first two quarters, picked up from the third quarter to register a 17.6 per cent growth but was marginally lower than 18.6 per cent growth during 2002-03.
The increase in non-food credit was due to improvement in industrial production and the trend "is likely to be sustained", the Survey said.
The incremental non-food credit amounted to Rs 1,19,684 crore (Rs 1196.84 billion) in 2003-04 as compared to Rs 99,448 crore (Rs 994.48 billion) a year ago.
Of the total Rs 2,63,834 crore (Rs 2638.34 billion) priority sector lending in 2003-04, credit to agriculture grew by 23.2 per cent to Rs 90,541 crore (Rs 905.41 billion).