Mumbai: In view of the incomplete and inconsistent picture given by the statistics that are provided by government statistical agencies, the schedule commercial bank credit data gives a better feel and insight as to what is the level of economic development.

The flow of credit is a good indicator of the level of economic development and business environment. The bank credit data also reveals semi-urban and rural markets for fast moving consumer goods, white goods, automobiles and cement.

The scheduled commercial bank aggregate credit numbers released by the Reserve Bank of India (RBI) for the financial year 2001-2002 (April 2001 to March 2002) reveal very interesting facts.

Of the total aggregate credit given by the banks, 79.7 per cent goes to the urban areas, 10.7 per cent to semi-urban areas and 9.6 per cent to the rural areas. Out of the 79.7 per cent of the total aggregate credit that goes to urban areas, 80.1 per cent goes to metropolitan cities. This effectively means that non-metropolitan urban areas receive just 15.9 per cent of the overall aggregate bank credit.

This vividly highlights the flow of credit in favour of tertiary (services) and secondary (industrial) sectors and clearly shows that keeping in mind the hassles and risk involved in distributing credit in the rural sector, banks are biased towards distributing more credit in the urban areas.

Overall aggregate bank credit distribution: FY-2002

Area	Credit (amount in rupees lakh)	% of total aggregate credit
Rural	65700.28	9.6%
Semi urban	73354.81	10.7%
Urban	544535.61	79.7%
Metropolitan	435943.27	63.8%
Total	683590.69	100.0%

Source: RBI

As far as regions are concerned, the western region gets the maximum credit, which is 35.2 per cent of the all-India aggregate. The western region comprises the states of Goa, Gujarat and Maharashtra and union territories of Dadra and Nagar Haveli, and Daman and Diu.

Region-wise aggregate bank credit distribution: FY-2002

Ranking in total credit	% of all India credit
Western region	35.2%
Northern region	24.6%
Southern region	23.9%
Eastern region	8.0%
Central region	7.5%
North-Eastern region	0.7%

Source: RBI

In the western region, 87.2 per cent of the credit distributed in this goes to Maharashtra. This basically is the result of the metropolis of Mumbai being located in Maharashtra. Gujarat follows Maharashtra where 11.9 per cent of the credit is distributed.

Western regions bank credit distribution: FY-2002

Western region states	% of western region
Goa	0.8%
Gujarat	11.9%
Maharashtra	87.2%
Dadra &Nagar Haveli	0.0%
Daman & Diu	0.0%

Source: RBI

In the northern region, distribution of credit is skewed in favour of Delhi. It receives 62 per cent of the total aggregate credit of the northern region. Punjab and Haryana, which receive 12.7 per cent and 6 per cent, respectively, follow Delhi. Again, even in this region credit distribution continues to be skewed in favour of metropolitan areas. The union territory of Chandigarh, which is comparatively very small compared to the states of Himachal Pradesh and Jammu and Kashmir, receives more bank credit.

Northern regions bank credit distribution: FY-2002

Northern region states	% of northern region
Haryana	6.0%
Himachal Pradesh	1.2%
Jammu & Kashmir	2.5%
Punjab	12.7%
Rajasthan	9.1%
Chandigarh	5.8%
Delhi	62.7%

Source: RBI

In the southern region, credit distribution is relatively more evenly spread, although the city of Chennai thus cause things to be more skewed towards Tamil Nadu. Tamil Nadu gets 38.6 per cent of the total bank credit of the southern region, followed by Andhra Pradesh and Karnataka with 24.1 per cent and 23.3 per cent, respectively.

Southern regions bank credit distribution: FY-2002

Southern region states	% in southern region
Andhra Pradesh	24.1%
Karnataka	23.3%
Kerala	13.7%
Tamil Nadu	38.6%
Lakshadweep	0.0%
Pondicherry	0.4%

Source: RBI

Central, eastern and north-eastern regions together account for just 16 per cent of the aggregate total bank credit distributed. The eastern region is marginally better off than the central as far as credit distribution by banks is concerned and this is mainly due to the metropolis of Kolkata.

West Bengal accounts for 65 per cent of the bank credit distributed in the eastern region; other states being Orissa (14.2 per cent), Bihar (11.7 per cent), Jharkhand (8.7 per cent). The bank credit distribution in Sikkim and Andaman and Nicobar is 0.2 per cent each of the total for the eastern region.

In the central region, Uttar Pradesh and Madhya Pradesh together account for 86 per cent of the credit distributed; Uttranchal and Chattisgarh being relatively more under developed states and sparsely populated states.

In the north-eastern region Assam accounts for 73.5 per cent of the total credit distributed in the region. Tripura is a poor second with 8.4 per cent, followed by Meghalaya at 7.3 per cent. In the north-east, the size of the state, population, population type (tribal, non-tribal) and accessibility to rail and road seem to influence the distribution of bank credit.

As far as the state-wise distribution of aggregate bank credit as a percentage of national aggregate is concerned, Maharashtra is at the top of the list with 30.7 per cent, followed by Delhi at 15.5 per cent and Tamil Nadu at 9.2 per cent. In Andhra Pradesh, Karnataka, West Bengal, Uttar Pradesh, Gujarat, Kerala and Punjab the share bank credit varies between 3 to 5 per cent.

As far as the share in bank credit to semi-urban areas is concerned Kerala is the leading state, accounting for 15.9 per cent of the bank credit distributed in semi-urban areas. Uttar Pradesh follows it at 9.2 per cent, Punjab at 7.6 per cent, Tamil Nadu at 7.2 per cent, Andhra Pradesh at 6.7 per cent, Gujarat at 6.2 per cent, Maharashtra at 5.1 per cent and Karnataka at 4.9 per cent.

Semi-urban areas are basically wholesale markets for agricultural commodities and centres for small-scale industries.

With regards to rural credit the data is surprising. Andhra Pradesh leads 11.3 per cent of the total aggregate rural credit being distributed there. Uttar Pradesh is a close second with 11.2 per cent, followed by Maharashtra at 10.4 per cent. Punjab is close at 10.3 per cent, followed by Karnataka, Tamil Nadu, Gujarat and Rajasthan at 8.7 per cent, 7.2 per cent, 5.2 per cent and 4.9 per cent, respectively.

This data basically reflects the growth of cash crops in most of the states and therefore states of Andhra Pradesh, Uttar Pradesh and Maharashtra have moved ahead in the rural credit ranking.

A scan of the bank credit data gives a fair idea of states, which are good investment destinations. It also gives an indication of the level of rural, semi-urban and urban development in different states.

For example Kerala, Uttar Pradesh and Punjabs semi-urban development comes out clearly from the bank credit data, and so does the rural development of Andhra Pradesh, Uttar Pradesh, Maharashtra and Punjab.