Credit Growth Rate Drops Among Farmers, SMEs

by GoNews Desk 3 months ago Views 2076
Credit Growth Rate Shows Steady Decline
The country’s economy continues to be in the doldrums as according to the Reserve Bank of India, the credit growth rate is showing a steady decline.

Latest RBI data reveal that both farmers and traders are taking fewer loans than before amidst the atmosphere of uncertainty, due to which economic activities have been affected. Several sectors are in the grip of recession and traders are staying away from taking loans for business.

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According to the RBI, the credit growth rate in the agricultural sector was 18.3% in December 2014. It reduced to 8.4% in December 2018 and fell further to 5.3% in December 2019. This means that farmers are taking fewer loans than earlier.

The credit growth rate for small, medium and large traders was 6.7% in December 2014. By December 2018, it had fallen to 4.4% and by December 2019, it was just 1.6%. The slow pace of taking loans shows that small businesses in the country are shrinking.

The most worrisome figures are of education loans. RBI figures show that the credit growth rate for education loans was 4.1% in December 2014, which fell into the negative in December 2018 and by December 2019, it had declined to -6.1%. In clear terms, fewer loans are being taken for higher education compared to earlier and students are being alienated from higher education.

Apart from this, the credit growth rate for the services sector and personal loans has also declined. However, growth has been registered in loans given to weaker sections of society and in home loans.

But a look at the bigger picture shows that the declining pace of loans points to the growing fear of non-payment of loans among people. Despite all the efforts of the government, people are not applying for loans.

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