State's priority sectors need ₹5.73 trn lending in FY25

Signalling a major boost to the $1 trillion economy target of Uttar Pradesh, the priority sector credit flow is estimated to touch ₹5.73 trillion in the current financial year 2024-25 (FY25), marking an over 50 per cent growth year-on-year.

- VIRENDRA SINGH RAWAT

The credit flow in FY24 was about ₹3.75 trillion.

According to UP government estimates, the state needs growth of 250 per cent, 300 per cent and 450 per cent in the agricultural, micro, small and medium enterprises (MSME) and services sectors respectively to achieve its $1 trillion goal.

In this context, the Yogi Adityanath government in the state has been nudging banks to improve upon the UP Credit Deposit (CD) ratio.

Against a CD ratio of 47 per cent in 2017, the UP CD ratio touched 60 per cent in FY24. Now, the state government is aiming to achieve a CD ratio of 65 per cent by the end of FY25.

CD ratio refers to the money given as loans by banks vis-a-vis funds raised by them. A high CD ratio indicates liquidity and easy availability of funds for industry.

Meanwhile, according to the UP State Focus Paper 2024-25 prepared by the National Bank for Agriculture and Rural Development (Nabard), the agricultural and MSME sectors would account for loans worth ₹2.46 trillion and ₹2.92 trillion respectively in FY25.

The agricultural loans would represent a growth of 6 per cent over last year. On the other hand, MSME loans would see an uptick of 178 per cent from ₹1.05 trillion in 2023-24 to ₹2.92 trillion in 2024-25.

Moreover, to boost private investment and propel UP as a preferred investment destination, the Yogi government has tasked officials with attracting investment and improving the CD ratio.