CHAPTER V PRIME MINISTER'S ROZGAR YOJANA - LENDING IN KERALA

Transcription

1 CHAPTER V PRIME MINISTER'S ROZGAR YOJANA - LENDING IN KERALA

2 CHAPTER V PRIME MINISTER'S ROZGAR YOJANA - LENDING IN KERALA For the eradicat~on of poverty and to improve the standard of living of the people, the Government formulated and implemented many schemes and programmes. Such programmes aim at generating sustainable employment opporti~n~t~es through the establishment of self-employed business units. The Prime Minister's Rozgar Yojana is a Central Government sponsored self- employment scheme for the educated unemployed youth. The scheme was launched in 1993 to provide sustainable employment opportunities through the establishment of micro enterprises. Under the scheme, financial assistance is available upto Rs. 2 lakhs for industrial and service activities and Rs. 1 Lakh for business activities without collateral securities. The successful ~mplementation of government sponsored schemes and programmes depends on the existence of a well-developed banking system. Commercial banks operating in the country are the lending agencies of many of

3 the Government sponsored schemes. They are required to finance such schemes without considering the financial soundness of the borrowers. They have played a very important role in the successful implementation of the F'MRY scheme. Regional Rural Banks and Co-operative Banks functioning in the col~ntry are not associated with the implementation of PMRY scheme. The State of Kerala is most suitable for the implementation of selfemployment schemes like PMRY because of lakhs of educated unemployed youth and vast network of scheduled commercial banks. The state is also a super commercial state with lot of possibilities of small ventures in business and service. This is also a positive factor for the implementation of the scheme and it adds to the success of the scheme. There are 3341 commercial bank branches in the State. The average number of PMRY loans to be sanctioned by a bank branch is less than 10 and it is as low as 3 in certain districts. The scheme is in operation all over the country around 10 years. Over a period of ten years the scheme could generate a total number of direct employment opportunities in Kerala with a total investment of Rs.48,878 lakhs as on 31" March 2003.

4 The PMRY borrowers could provide employment to an average 3 persons each in their units. This resulted in the indirect employment generation under the scheme. Thus the actual employment generated under the PMRY scheme is more than 3 times of the employment generated directly i.e. with a total investment of Ks.48,878 lakhs the scheme generated 2,70,525 employment in the State. The average investment for generation of one employment is Rs.0.18 lakh. The status of PhARY scheme in Kerala from to is analysed in this chapter Target Allocation The central PMRY Committee fixes the target under the scheme at national level. This target is then allocated to different states. The target allocated to Kerala from to is analysed in Table 5.1. As shown in the table, the target for , when the scheme was implemented in the country for the first time was only for six months from 1993 October to March It was beneficiaries at national level. This has

5 increased to 3,51,000 beneficiaries in The target allocated to Kerala in was 2755 beneficiaries. This has increased to beneficiaries in Though the target at national level has increased continuously during the reference period. the Kerala target has increased to 24,000 beneficiaries in and thereafter it gradually declined to beneficiaries in I ,.v- + C.G.R Source SLBC Table 5.1 Allocation of PMRY Target In Kerala Year 1 'Target (No. of Beneficiaries) % To All India 1 I India + Kerala , ,OOO, 15, ,21, ,21,300 f 16, ~-~-'-~.61, ~ i 2,90, , 1 3, , ,700 ~

6 The share of State target to National target was 6.89 per cent in This has declined to 5.47 per cent in lnspite of the increase in target at national level. the share of state to national target shows a declining trend. The increase in target recorded a compound growth rate of per cent at national level, while in Kerala it recorded a compound growth' rate of per cent. Achievement Of Target Achievement of the State under the PMRY Scheme is set out in Table 5.2. The table shows that the number oi loans sanctioned has increased from 1578 in to in While the number of loans disbursed has increased from 1458 in to 8458 in The achievement in terms of sanction was 57 per cent in This has increased to 83 per cent in The State coulcl ach~eve its target in sanction only in The achievement in was 102 per cent except this the State could not achieve its target under the scheme in sanction of loans.

7 - Table Achievement of Target by Banks in Kerala under PMRY I I (In Number of Beneficiaries) 1 C.G.R Source : SLBC The achievement of the State in disbursement of loan 1s separately analysed in the table, In , the number of loans disbursed was 53 per cent of the target. This has declined to 44 per cent in It is important to note here that under the scheme, the State could not attain cent per cent achievement in disbursement of loans during the reference period. In fact the disbursement is much less than the loans sanctioned.

8 The highest achievement in the State is 86 per cent, which is recorded in the year The lowest achievement in the State is 40 per cent, which is recorded in the year Achievement shows a continuous increase for the first four years upto and thereafter it began to decline. The loan sanction recorded a compound growth rate of while the achievement recorded a compound growth rate of per cent. The target recorded a compound growth rate of per cent. In order to know whether there is any significant difference between the growth rate in target and growth rate in disbursement, Mann-Whitney U test is used. The following null hypothesis was framed for this purpose. Growth rate in target and growth rate in achievement does not differ slgnifrcantly The calculated value of % is The table value of Z at 5 per cent level of significance 1s Since the calculated value is less than the table value, the hypothesis HI is accepted hence growth rate in target and growth rate in achievement does not differ significantly.

9 Performance Of Banks Under PMRY The sanction and disbursement of PMRY loan by the banks in the State in amount from to are analysed in Table 5.3. As per the Table the amount of loan sanctioned has increased from Rs lakhs in to Rs lakhs in While loan disbursement has increased from Rs lakhs in to Rs lakhs in The maximum sanction was rn the year which amounted to Rs.l0, lakhs. After that the amount of loan sanctioned began to decline. As shown in the Table, the maximum amount of loan disbursed by banks under the PMR'I scheme in the State is Rs lakhs, which is recorded in the year Thereafter the amount of loan disbursed began to decline. The amount of PMRY loan sanctioned in the State recorded a compound growth rate of while the amount of PMRY loan disbursement in the State recorded a compound growth rate of In order to know whether there is any relationship between amount of loan sanctioned and amount of loan disbursed. Karl Pearson's co-relation co- efficient 1s calculated

10 ~.-. Table 5.3 Performance of Banks in Kerala under PMRY (Amount in Lakhs) Per Cent ~- ~ F C.G.R. I Source : SLBC The co-relation co-efficient between amount sanctioned and amount disbursed is This ind~cates the existence of relationship between amount sanctioned and amount disbursed. To study the s~gn~ficance of relationship between amount sanctioned and amount d~sbursed Z test IS used The following null hypothesis was framed for this purpose.

11 Figure 5.1 '-OMPA QIWN BETWEEN PMRY ADVANCES SANCTIONEDAND DISBURSED

12 There IS no sign~ficant relationship between amount sanctioned and arnourlt disbursed The table value of % at 5 per cent level of significance is 1.96 whereas the calculated value is 09;'Z. Since the calculated value is less than the table value, the hypothesis is accepted, hence there is no significant relationship between amount sanctioned and amount disbursed shows a significant relationship. Performance of Banks in the State on percentage-wise disbursal of loan to target and sanction IS analysed and shown in Table 5.4. As per the table in , the banks disbursed 92 per cent of the loan sanctioned. This has declined to 53 per cent in but the achievement (per cent of loan {disbursed to target) in was only 53 per cent of the target and this has ~jeclined to 44 per cent in This reveals that the banks in the State failed to achieve their target and that they have not disbursed cent per cent of loan sanctioned during tk~e reference period.

13 Table 5.4 Disbursement of Loan in Kerala under PMRY in Percentage Period.-- 1 Per Cent Of Disbursement Per Cent Of I To Sanction Disbursement To Target T ~ - - ~.L_ z: I I SourceS~~c f ' ~ In order to know whether there is any significant difference between per cent of disbursement to sanction and per cent of disbursement to target X2 test is used. The following null hypothesis was framed for this purpose. There is no significant difference between per cent of disbursement to sanction and per cent of disbursement to target

14 The calculated value of x2 is where as the Table value of X2 at 5 per cent level of significance is As the calculated value falls within the acceptance region, the hypothesis is accepted i.e. per cent of disbursement to sanction does not differ significantly from per cent of disbursement to target. Bank Group wise Performance The target allocated to the State of Kerala under PMRY Scheme is distributed among the banks operating in the State for implementation. The target allocated to different bank groups under the PMRY scheme is anlaysed and it is given in Table 5.5. As per the table, the target allocated to State Bank group IS 30 per cent of the State target while the allocation to nationalized banks varies between 36 to 39 per cent. This indicates a relatively more role assigned to natlonal~zed banks by the authorities in the implementation of the PMRY scheme in the State. The target allocated to other banks in the State varies between 30 to 34 per cent. The growth rate in target allocation is for the State Bank group and for Nationalised Banks while in other banks the growth rate is 21.79, which is the highest among different bank group.

15 Source : SLBC Number of bans sanctioned by different bank groups in the State under the PMRY scheme from to is anlaysed in Table 5.6. The number of loans sanctioned by the State Bank group in the State under the PMRY scheme has increased from 528 in to 5278 in while that of nationalized bank it has increased from 614 to 6142 during the same period. In other banks it has increased from 436 in to 4647 in

16 ~ ~~ I --- Table 5.6 I SB.~-., ' E Source : SLBC As stated in the table, the nationalized banks have achieved their target under the scheme for four years i.e. from 1995 to 1998, while the State Bank could achieve their target only for 2 years i.e. in 1996 and Banks in the other groups could not achieve their target under the scheme throughout the reference period. The highest achievement is 112 per cent which is recorded by the natronalized banks in the year , while the lowest achievement is 39 per cent which is recorded by the other banks in the year

17 Table 5.7 shows the achievement of different bank groups in disbursement. In this Table, the number of loans disbursed by different bank groups in the State under the PMRY scheme is compared with target and sanction. The loan disbursed by the State Bank group under the scheme has increased from 486 in to 3218 in In nationalized banks, it has increased from 587 to 2965 during the same period. In other bank groups, it has increased from 385 in to 2275 in Table 5.7 Bank Group wise Performance Source : SLBC

18 In State bank group, the achievement to target was 58 per cent in This has declined to 55 per cent in In nationalized banks, this has declined from 96 per cent to 42 per cent during the same period. The achievement of other bank groups has declined from 44 per cent in to 36 per cent in The ach~evement of nat~onal~zed banks in disbursement of loan when compared to sanction was 96 per cent in , which was the highest achievement in the State among different bank groups. This has declined to 42 per cent in , which is the lowest achievement in the State among different bank groups. In State bank group the achievement to sanction declrned from 92 per cent in to 61 per cent in while in other bank group it has declined from 88 per cent to 49 per cent during the same period. The compound growth rate of loan disbursement is 20.81, which is the highest among different bank groups. In nationalized banks it is 17.58, which is the lowest. The compound growth rate is for other scheduled commercial banks. It 1s clear from the table that the importance given by different bank groups to PMRY in Kerala is declining year after year. During the initial period

19 Since the calculated value is greater than the table value, the hypothesis + the banks have shown more interest towards the scheme, but later they were reluctant in providing loans under PMRY scheme. The performance of banks increased from to , thereafter it began to decline. In order to know whether there is any significant difference in the performance of different bank groups, Kruskal Wallis Test is used. For this purpose the following null hypothesis was formed. HA There IS no s~gnificant difference in the performance of different bank groups in Kerala under PMRY In order to test the hypothesis "H" value is calculated. The calculated value of H is The table value of X2 at 5 per cent level of significance is is rejected. Therefore, it may be concluded that there is significant difference in the performance of different bank groups in Kerala under PMRY scheme. PMRY Advances Of Different Bank Groups Advances provided by different bank groups in Kerala under PMRY scheme from to are analysed and given in Table 5.8.

20 Table 5.8 Bank Group wise Advances under PMRY Scheme in Kerala from to (Amount in Lakhsl! I SBG 1 NBG 1 OCB 1 ( year T-r--- +r I 1 Amount Per No Amount Amount Per No' Amount Borrower 1 Borrower I Source : SLBC As ~t 1s shown in the table, the amount of loan disbursed by the State Bank group under the PMRY scheme in the State was Rs lakhs in Th~s has increased to Rs Lakhs in The loan advanced by the nationalized banks has increased from Rs lakhs to Rs lakhs during the same period, while other bank group advance under the scheme has ~ncreased from Rs lakhs in to Rs.1183 lakhs in

21 '-!gt~re 5 2 RnNU GROUPWISE ADVANCES UNDER PMRY

22 In State Bank group, the advance per borrower has increased from Rs.0.52 lakhs to Rs.0.53 lakhs over a period of ten years, while in nationalized banks, it has increased from Rs lakhs to Rs.0.54 lakhs during the same period. In other bank groups, it has declined from Rs lakhs in to Rs lakhs in The highest advance per borrower is Rs lakhs, which is recorded both by the State Bank group and nationalized banks, while the lowest is Rs lakhs, which is recorded in the State Bank group. During the reference period the State Bank group generated a total of employment opportunities under the PMRY scheme with an advance of Rs Lakhs. The average bank advance for one job in State Bank group is Rs.0.54 Lakh. The nationalized banks in the State helped beneficiaries to find employment with an advance of Rs Lakhs. It generated employment opportunities. The average bank advance per beneficiary is Rs 0.52 Lakh, in nationallzed banks. The other commercial banks could create or?ly, number of PMRY beneficiaries during the same period with an advance of Rs lakhs The average bank advance per beneficiary is Rs.0.54 Lakh in other commercial banks The lowest PMRY advance per borrower is Rs.0.42 Lakh, which 1s in State Bank group and the highest is Rs.0.61 Lakh, which is recorded both in State Bank group and Nationalised Bank.

23 District Wise Performance The State PMRY Committee is entrusted with the duty of allocating the state target to different districts. Table 5.9 shows the district wise analysis of PMRY target. As per the table, the target allocated to Ernakulam District is the highest in the State duri#ng the reference period except in The target allocated to Ernkaulam district has increased from 500 beneficiaries in to 1900 benefic~aries in In , the maximum allocation is made to Palakkad district, which is 2100 beneficiaries. The target allocated to Wayanad district is the lowest in the State. In Wayanad district, it has increased from 5 beneficiaries in to 400 beneficiaries in It is also clear from the table that the target allocated to various districts has gradually increased till , except in Kollam. Alappuzha. Kozhikode and Kasargod. The target allocated to these four districts shows slight variation. But after 2000, the targets allocated to all districts began to decline. This indicates the declining importance of PMRY scheme in the State.

24 D i s t r i c t ~ k Z & ,. ---, I P W I W I 213 District??? k~rlvandrum~tt I Table 5.9 Target Of PMRY From to (In Number of Beneficiaries) U) m. I?' w m 1600 Kollam i: 200 ' Alapuzha pathanam-= ' Kottayam t-t t~-+~iz&zt~~j 1600 j 2000 j w? (c m 1750 m? 00 0) m N N 4 0 N (? 4. c 4 0 N / Palakkad I I 2100 / I- -_7-,._ I I I Malappuram ( Wayanad 5 i , / 400 / 4-1 Kannur ) / ( 1050 / 1260 / 1245 / 1100 / 1000 / ( Kasargod ' / / I All Kerala /20000/24000~ ) L Li_i Source SLBC District wlse sanction of PMRY loan in percentage is given in Table Most of the districts in the State could not achieve the target. All the districts performed well in During that year all the districts in the State except Kottayam. Kozhikode and Kasargod achieved their target in sanctioning PMRY

25 loans. The highest achievement was in Trivandrum and lowest in Kottayam and Kozh~kode. None of the district could achieve the targets for three years i.e and The poor performance of the districts was in the year In Trivandrum district achieved 47 per cent, which was the lowest in the State and the highest achievement in the State during the same per~od was 85 per cent which was in Trichur district. Wayanad district achieved target during the first 4 years of the scheme. The performance of the district was the highest in the State during the reference period. The achievement of Wayanad district recorded a compound growth rate of 51.2 per cent. Kottayam. Kozhikode and Kasargod districts could not achieve their target in sanction of PMRY loans during the reference period. The lowest achievement in the State since inception of the scheme is 38 per cent which was in Kottayam district in the year

26 TABLE 5.10 All Kerala Source The h~ghest achievement since inception is 119 per cent, which was recorded in the year in Trivandrum. The performance of Kozhikode distrlct 1s the lowest in the State throughout the reference period. Kozhik~de

27 recorded a compound growth rate of The compound growth rate of achievement in Trivandrum is per cent, which is the lowest in the State - - I TABLE 5.1 I -- Achievement In Terms Of Number Of Loan Disbursed ~ i s t r i c t ~ i s e 1 (In Percentage) i:.- P DISTRICT! 1? % ' I h z O 0 m m m m m 0 0 I N N a N (1 I 1 Kollam / [ F / / PI ldduki / 6q1-% Ernakulam '-+i?i7,--+.--~ Thr~ssur i Malapuram i Kozh~kode Wayanad - - r 7 z 8 8 T T ~asar~od I --t--k j Palakkad 55 83, 82, 85, 76 ;:, ii I I 4g I Kannur : / ALL KERALA T; _I-.-, Source : SLBC

28 Number of loan disbursed under PMRY scheme in various districts from to is given in Table 5.11 in percentage. Though the loan sanctioned was the highest in , the loan disbursement in various districts was the highest in During this year Alapuzha district achieved its target. No other district could achieve the target during the reference period. In order to find out whether there is any significant difference in the performance of different districts under the PMRY Scheme in Kerala. The following null hypothesis was framed. H5 There is no significanct difference in the performance of different districts under the PMRY Scheme in Kerala. Fried Man's Two way analysis of variance by ranks was applied to test the validity of the hypothesis. The calculated value of X2 is while the table value of %' at 5 per cent level of significance is Since the calculated value is greater than the table value, the hypothesis H5 is rejected. Therefore it is concluded that there exists significant difference in the performance of different districts under the PMRY Scheme in l<erala.

29 The disbursement of PMRY loan in number is actually the number of employment generation in the State. Under the scheme, the Palakkad district performed well in disbursal of loan under PMRY. The employment generated in the Palakkad district is the highest in the State. The scheme generated a total of 42,000 employments in the district during the reference period. Table 5.12 shows district wise distribution of PMRY advances in the State from to As shown in the table, Ernakulam district is the maximum benefited district under the PMRY scheme. It has received maximum amount of advance under the scheme. Wayanad district is the least benefited district under the scheme. It has received only the minimum amount of advance under the scheme.

30 I. - - Table District Wise Distribution of PMRY Advances (Amount in Lakhs) -,.-.-. a P : U) i w N # m m m o o m m 0) m m '. - I N N N District Trivandrum ( / / Kollam / 517 i 529 i 486 / 370 / 386 / 305 / 414 / Patanamthitta I / 343 / 346 / / 266 / Alleppey Kottayam lddukkl , Ernakulam I I I I I I I 1 I I ' Thrissur 97 / / / 675 / 824 / 479 I--- Palakkad 60 f 293 / 448 i 582 i 691 i 285 i 479 i 542 i 575 t359 Malappurarn ( 492 ( 367 / 273 ( / Kozhikode ' 539 / 623 / 526 / Wayanad ) 127 / 142 / / 73 / Kannur / 361 / / I Kasargod ( All Kerala ' ' 138 / / / 60 ( ( (4888( / 4838 / 4504 / Source : SLBC Average number of loans disbursed by a bank branch in the State under the PMRY Scheme is shown district wise in Table Though the average number of loans to be sanctioned by a bank branch in the State under the Scheme is three, the actual number of loans disbursed is less than three. In the first year of implementation, the period covered was only six months from

31 October 1993 to March The average number of loans disbursed during the initial period is one in all the districts in the State. Since the average number of loans disbursed IS less than three in some districts, while in some other districts it is three and above Table 5.13 j---- District wise PMRY Loan Per Branch (In Number) Patanamthitta : Kottayam I ; lddukki 1 * T / 2 1 Ernakularn. Kannur -.- Source : SLBC

32 The per branch PMRY loan is the highest in Palakkad district. Throughout the reference period the per branch PMRY loan in the district is the state average. It is the lowest in Pathanamthitta district. In the district it is below the state average except in , and PMRY Advance Per Borrower PMRY advances per borrower in Kerala from to is analysed and is given in Table Table 5.14 Per Borrower Over The Years (Amount in Lakhs) 7 Amount I Borrower Source : SLBC I 0.55

33 The bank credit per borrower is the average amount of loan for generating employment opportunity in the State. This has increased from Rs.0.52 Lalth in to Rs Lakh in The average bank advance per borrower has increased upto Rs.0.57 Lakh and declined upto Rs.0.49 Lakh during the reference period. Table shows the recovery performance of all scheduled commercial banks under government sponsored schemes in Kerala. Table ) Recovery Performance of all Commercial Banks in Kerala Under Govt. Sponsored Schemes (In Percentage) i C SCHEMES IRDP DRI, I I SJSRY i PSA L Source SLBC 1 1 L.-L--LI LiJ As per the table, the banks performed well in recovering dues under priority sector advances. The rate of recovery dues under priority sector

34 advance IS the h~ghest in the State. In 1997 the rate of recovery under priority sector was per cent. But th~s has declined to per cent in The recovery performance of banks under PMRY scheme is very poor. The rate of recovery of dues under PMRY scheme has declined from per cent in 1997 to per cent in All these indicate that the recovery performance of all scheduled commercial banks in the State under Government sponsored scheme is declining year afler year except the newly started SJSRY scheme. Under SJSRY scheme the rate of recovery of dues has increased from per cent in 1999 to 83 3 per cent in 2003.