CHAPTER IV

PROFILE OF THE STUDY AREA

4.1 Introduction

The basic thrust of this dissertation is to evaluate the impact of PSL of

Commercial banks upon the economic development of Pondicherry. The impact has to

be assessed in terms of its people, their economic activities, diversification of the

economy, contribution of State Domestic Product. Per capita Income, infrastructure

development and so on. The evaluation, perforce, therefore requires a knowledge of the

socio economic profile of the area to which this study relates. This chapter therefore

purports to provide a background of the economic and social characteristics of the Union

Territory of Pondicherry, which would sharpen our understanding of the nexus between

PSL and economic development. Particular attention however i s made on the variables,

which are more germane to this study.

4.2 Location, Area and Population

Pondicheny, a charming Territory on the East coast, is one of the smallest

territories in India with 0.09~ per cent of India's total population and 0.01 per cent of

'~irectorate of Economics and Statistics, Government of Pondicherry - Abstract of, Statistics, 1994-95.

area. It ranks 28'" among all States and Union Territories in India in area and 25"' in

population. This Territory. spread over an area of 492 sq.kms. has a population

of 8,07,785 living in 1,62,448 households with an average family size

of 4.97 (1991 census). The sex ratio is 979 females for 1000 males and the density of

population is 1642 persons per sq.krn. The proportion of scheduled caste population to

total population is 16.25 per cent and the literacy rate is 74.74 per cent. There is

considerable migration of people in the Union Territory of Pondicherry from the

neighbouring States, which also accounts for the growth of population.

The Union Territory of Pondicherry is predominantly urban in character

with 64.0 per cent of the total population (5,16,985 persons) living in areas classified as

urban. Pondicherry ranks third at the All India level in the percentage of urban

population to total population next to Delhi (89.9) and Chandigarh (89.7). The regional

profiles are described hereunder.

Pondicherry region is located on the Coromandel coast and it lies

between north latitudes 1 l o 46' and 12" 03' and east longitudes 79" 36' and 79" 52'. It

is south of Madras, 162 kms. away by road. It has an area of 293 sq. kms. (59.55 per

cent of Territory's area) with a population of 6,08,338 (75.35 per cent of Territory's

Population). The density of population of the region is 2076 persons per sq.km. This

region consists of two municipalities and five commune panchayats with 1,23,934

households.

Kamikal region, which is the next important region of the Territory, lies

1 SO h s . south of Pondicherry. It is located between 10" 5 1 ' and 1 1 " north latitudes and

7 8 q 3 ' and 7 9 9 2 ' east longitudes. It consists of one municipality and five commune

panchayats with 26,492 households. Karaikal region with an area of 160 sq. kms. (32.5

per cent of Territory's area) has a population of 1.45.703 (18 per cent of Territory's

population), the density of population being 91 1 persons per sq, km.

Mahe region is situated at a distance of 830 kms. from Pondicherry and is

located on the Malabar coast. This region encloses three villages and 7963 households.

Mahe with an area of 9 sq. kms. (1.85 per cent of Territory's area) has a population of

33,447 (4.15 per cent of Territory's population). The density of population here is the

highest with 3716 persons per sq. km.

Yanarn is situated on the East coast and it is at a distance of 870 h s .

from Pondicherry. The entire region is declared as urban area and there are 4059

households. This region has an area of 30 sq, krns. (6.10 per cent of Territory's area)

and a population of 20,297 (2.50 per cent of Territory's population). The density of

population is the lowest with 677 persons per sq. km.

The other demographic characteristics of the district chosen for the study

are given in the following Table, region-wise.

Table 4.1: REGIONAL PROFILE OF THE UNION TERRITORY OF PONDICMERRY

S1. Union Pandicherrj Karaikal N Particulars Territory of Region Region 0. Pondicherry

(1) (2) (3) (4) (5)

Area ( sq.km.) Population Male (per cent) Female (per cent) Rural Population (per cent) Urban Population (per cent) SC Populatio~~ (per cent) ST Population (per cent) Density of Population (persons per Sq,Km.) Literacy Rate (per cent) No.of Muilicipalities Noaf Communes No.of Villages No.of Households

Ma he Region

Yanam Region

Source: (a) Directorate of Census Operations, Government of India, Pondlcheny Union Territory 199 1 Poaulation Data Sheet, 199 1 .

(b) Directorate of Economics and Statistics, Govemment of Pondicherry Statistical Handbook 199 1-92 to 1997-98.

4.3 Labour Force Participation

Any economy requires an active labour force for growth and sustenance.

These active labour force accelerate the growth process in the economy, and also decides

the destiny of the economy. The census data2 reveal that as per 1991 census, only

32.41 per cent of total population was engaged as labour force in economic activities.

The bends in labour force participation shows declining trend Itom 37.49 per cent in

196 1 to 32.4 1 per cent in 199 1, indicating a decline of 5.08 per cent.

2~irectorate. of Economics and Statistics, Abstract of Statistics. 1994-95, Government of Pondicherry, Pondicherry.

The decline in the participation of labour force ratio indicates the growing

incidence of unemployment among able bodied persons. Unless people are given

adequate employment opportunities to participate in the State productive process, there

would be slow growth in State Domestic Product. Acute urbanisation and rapid

industrialization are the important phenomenon that has caused decline in labour force

participation in primary sector like agriculture and fisheries. Reduction in the net area

sown3 might have also played a role in low participation of labour force in agricultural

sector. Area under cultivation which was 27,294 hec. in 1991 has declined to 24,863

hec. in 1998' which shows an average decline of 350 hec. per annum. Even

though the activities under manufacturing and construction are increasing, the

resultant automation in almost all areas of manufacturing sector has made dent in the

decline in labour force. The decline in agriculture and allied activities has resulted in

increase in urban non-manual employees. The decrease in the ratio of labour force

mainly in the primary and secondary sectors in turn has automatically been redistributed

to different sub-sectors of the tertiary sector, that is, in other services, trade and

commerce sectors (both public and private).

The sector-wise participation of workers into primary, secondary and

tertiary indicates that the participation of the labour force in the primary sector has come

3~irectorate of Economics and Statistics, Statistical Handbook 1997-9 8, Government of Pondicherry.

'~irectorate of Ewnomics and Statistics, Season and Crop Report 1996-97, Government of Pondicheny.

down by 10 per cent, that is, from 49.54 per cent in 1961 to 39.23 per cent in 199 1 '. The percentage distribution of workers in secondary sector was between 20 and 22 per

cent during the last three decades. The fall in the percentage distribution in primary

sector by 10 per cent has been compensated by the tertiary sector. This sends a clear

message that services sector play a major role in this Union Territory. The people who

do not find employment in rural areas migrate to urban areas to get themselves engaged

in various tertiary occupations and cause the percentage distribution to go up.

4.4 Trends and Composition of State Domestic Product

State income is the barometer of an economy. State Income was Rs. 4664

lakhs during 1971 -72 (at 1970-71 prices) and increased to Rs. 105890 lakhs in 1996-97

at 1980-81 prices. It has grown at an average rate of 13 per cent per annum during the

last three decades. The percentage distribution of State Domestic Product, sector-wise6

is given in Table 4.2 below :

'~irectorate of Economics and Statistics, Statistical Handbook 1997-98, Government of Pondicherry.

!Directorate of Economics and Statistics, Government of Pondicherry - Statistical Handbook 1987-88 - 1997-98.

Table 4.2: SECTOR-WISE PERCENTAGE DISTRIBUTION OF NET STATE DOMESTIC PRODUCT AT 1980-81 PMCES

(in percentage)

S1. No. Items 1986 - 87 1996 - 97

I. Primary Sector 16.76 14.39

1. Agriculture & Animal Husbandry 8.42 10,37

2. Forestry & Logging

3. Fishing

4. Mining & Quarrying

11. Secondary Sector 48.38 25.37

1. Manufacturing (Registered)

2. Manufacturing (Unregistered)

3. Construction 32.42 8.33

4. Electricity, Gas & Water Supply (-) 1.68 (-) 2.39

111. Tertiary Sector 34.86 60.24

1. Transport, Storage & Communication 5.12

2. Trade, Hotel & Restaurants 6.44

3. Banking & Insurance 2.73 5.89

4. Real Estate, Ownership of dwelling & 2.24 5 .OS

Business Services

5. Public Administration 8.48 6.60

6. Other Services 9.85 12.10

Total 100.00 100.00

Source: Percentages are worked out based on Data in Statistical Hand Book, 1986-87 to 1997-98, Directorate of Ecanomics and Statistics, Government of Pondicherry, Pondicheny .

The sector-wise percentage distribution for 1996-97 as compared to 1986-

B7 (at 1980 - 81 prices), reveal the growing importance of tertiary sector in the total

State income. The contribution of primary sector during 1996-97 was only 14.39 per

cent as against 16.76 per cent in 1986-87. The share has come down to the extent o f 2.37

per cent, mainly, under fisheries sector. The secondary sector which consists mainly of

manufacturing (registered and unregistered), and construction has contributed 25.37 per

cent in 1996-97 as against its contribution of 48.38 per cent in 1986-87. During the last

10 years, a perceptible decline has taken place in respect of secondary sector. These

downward trends noticed both under primary and secondary sectors have been

compensated by the increased percentage share of tertiary sector in the overall State

income. From only 34.86 per cent in 1986-87, it has gone up to 60.24 per cent. The

significant increase under tertiary sector was mainly due to the increased contribution

made under trade, hotel and restaurants and transport. storage, and communications,

besides banking and insurance, real estate and other services.

A study of the sectoral composition of SDP reveaIs the role of each

sector in the economy of the overall economic development. The change in sectoral

composition indicates the structural shifis that are taking place over the years in the

economy. In other words, the sectoral growth pattern reveals that the economy of the

union Territory is gradually shifting from agricultural activities to non-agricultural

activities indicating economic dynamism and transformation of the territory towards a

take off stage. The decline in the share of the primary sector is in confirrnity with the

theories of economic growth, which postulates a decline in the significance of the

primary sector during the process of growth. The increase in the tertiary sector indicates

the expansion of trade, hotel, restaurants, real estate besides, banking, transport and

communication. Moreover, it also reveals the relative importance assigned to tertiary

sector in the development strategy adopted by the Government.

Though the services sector play a vital role in Pondicheny economy, this

ground reality was not felt by the cornmerc1a.1 banks in allocating adequate credit to it

under Annual Credit Plan of the Lead bank as shown below :

Table 4.3: OUTLAY UNDER ANNUAL CREDIT PLAN

(Rs. in lakhs) S1,No Sector 1980 1985 1990-91 1995-96 1996-97

1 Agriculture and Allied activities 7 10.72 (Primary Sector) (58.49)

2 Industries 321.61 (Secondary Sector) (26.47)

3 Services 182.70 (Tertiary Sector) (1 5.04)

Total 1215.03 (100.00)

Source: Indian Bank (Lead Bank), Union Territory of Pondicheny - Annual Credit Plan 1980 - 1996-97, Pondicherry.

If we see the credit allocation made under different sectors since 1980, it

is observed that credit allocation has gone up by 4.34 times in primary sector

(agriculture and allied activities), 8.34 times in secondary sector (industries) and 6.42

times in tertiary (services) sector. If we relate the contribution made by different sectors

towards SDP, the contribution from primary sector has come down by 4.11 per cent, and

30.18 per cent under secondary sector. In respect of services sector, it has gone up by

34.29 per cent. This shows that service sector has a good absorbing capacity. Despite

th is favourable climate under service sector, Commercial banks are reluctant to lend.

4.5 Per capita Income and Poverty

The Union Territory o f Pondicherry, has a per capita income of

Rs. 1 1677 in 1996-97 as against the all India average per capita Income of Rs. 1077 1,

The per capita income is an average indicator to study and find out the pulse of the

economy and the standard of living of the people. Though Pondicherry is endowed

with good infrastructural facilities along with high per capita income, than the all India

average, there is poverty in the midst of plenty. In Pondicheny two third of the area is

urban and the remaining one third is rural. Some urban pockets in Oulgaret municipality

and the entire Mahe and Yanam municipalities are talien for assisting beneficiaries

under ImP of DRDA.

As per the recent norm of Government of India, families who earn an

income upto Rs.20,000 per annurn in rural areas are considered as families living below

poverty line (BPL), whereas, the urban BPL norm is ~s.23.000'. A BPL survey was

conducted in Pondicherry in 1998 by DRDA to find out the number of poverty related

families living in rural areas. It was concluded that 63262 are BPL families in the Union

Territory of Pondicherry. Out of these families, 22562 families are scheduled caste

families, which works out to 35.66 per cent.

As per the projected population as on Fisrt March, 1998 there are 1863 80

numbers of families, out of which 63,262 are estimated BPL families which means

that 33,94 per cent of the families is BPL. If a separate BPL survey is conducted for

wban areas with Rs.23,000 as the norm, the percentage of BPL families from the

present 33.94 per cent would go up to a significant level. As against the all India average

of 35.97 per cent of BPL families, it is 37.4.0 per cent in Pondicherry and hence the

Union Territory of Pondicherry is to be treated as a poverty related state and this Union

Territory needs to be assisted by innovative credit linked programmes to increase the

SDP and thereby ta make the people to cross the poverty line.

'~istrict Rural Development Agency, Survey on Below Poverty Line, Pondichmry, 1998,

4.6 Economic Activities of the Study Area

Agriculture is still a major sector of economic activity in all the four

regions of the Territory and the agricultural sector is dominated by small and marginal

farmers and landless labourers. The cropping pattern shows that the area under food

crops account for 83.95 per cent o f the total cropped area of the Territory while 16.05

per cent of the cultivated area is earmarked to non food crops. Paddy is the major crop

and it occupies nearly two-third of the total cropped area. Pulses, ragi, cumbu and other

cereals are the other notable crops grown in this Territory. The major cash crops

raised are ground-nut, sugarcane, coconut and cotton. Although technological changes

have come very rapidly in agriculture, the agricultural sector as a whole remains at a

subsistence level providing hand to mouth existence to a large number of farmers. The

degree of diversification and commercialisation is low. The present effort of the

Government is designed to commercialise agriculture so that the income and

employment of the farmers can be enhanced.

Animal husbandry is also an important economic activity in the Territory.

Dairy and poultry farming are undertaken on a large scale mostly as a subsidiary

occupation to agricultural activities.

Since all the four regions are maritime areas, fishint is emerging as a

very important occupation of the people. This territory has a coastal line of 45 kms and a

continental shelf of 675 Kms, 1347 hectares of inland water and 400 hectares of brackish

water. The fishery wealth of the Territory is quite substantial. Many large sized fishery

farms and a couple of hatcheries have come up recently.

!Fisheries Department, Annual Report, 1 996-97, Government of Pondicherry , Pondicherry .

Industrially. the Territory has made substantial progress in the post

merger period. Declaration of the Union Territory as industrially backward has

given a new impetus to the industrial growth process. The establishment of Pondicherry

Industiral Promotion Development and Investment Corporation (PIPDIC) District

Industries Centre (DIC) and various incentives provided by the Government had

contributed to greater spurt to industrial activities. As on 3 1.3.97', 30 large scale

industries including Anglo French Textiles, Barathi Mill, Swadeshi Cotton Mill,

Pondicherry Paper Mills, New Horizon Sugar Mill and Pondicherry Co-operative Sugar

Mill are fmctioning in this Territory. 90 medium scale industries and 5726 registered

small scale industries are in the Union Territory of Pondicherry. The service sector is

widely expanding in recent times. Expansion of activities of transport operators such as

auto, tempo, trucks, automobile mechanics, auto workers, retail traders such as provision

stores, restaurants, retail cloth shops, vegetable vendors, flower and fruit sellers, small

business men, tea stall owners and retail shop keepers, self employed artisans such as

carpenters, blacksmiths, potters, cobblers, tailors, launderers and professionals such as

doctors, advocates, engineers has taken place.

The Union territory has developed infrastructure in terms of road, power,

water supply, housing, transport and communications. In the sphere of health and

education, its progress is well ahead of many of the States of India. All the villages of

the Territory had been electrified by the end of the Fourth plan itself, Water supply has

been provided to almost all the villages. Most of the villages are linked to the head

quarters through a number of roads. Marketing system is well developed. The co-

operative sector has established a number of grocery and milk societies. Government

9 Industries Department, Industrial Policy 1997,, Government of Pondicherry , Pondicherry .

distributes essential commodities such as rice, sugar. kerosene and cloth through a net

work of fair pricc shops.

It may be worthwhile ta mention some of the glaring regional differences

in the economic avocations among the four regions of the Union Territory. In

Pondicherry region, the activities of secondary sector and territory sector are more

predominant than the agricultural activities. The fast conversion of agricultural land due

to the growth of urbanisation, industrialisation and development of other infrastructural

facilities has reduced the scope of agricultural activities. However, fishing and animal

husbandry activities continue to be the dominant activities in Pondicherry region.

Karaikal region, being predominantly the rural economy, is depending on

the prirnary sector for its income generation activities. Agriculture is the life blood of

the economy as it provides liveIihood to nearly 45 per cent of the total work force of the

region. Food crops are grown in 95.63" per cent of the total cultivable area in Karaikal

region of which paddy is grown in 63 per cent of the cropped area. Pulses occupy the

second position with about 29 per cent of tlie area under it. Animal husbandry and

fishing are the other two major occupations, which provide employment and

livelihood. The rate and level of industrial development is low. There are four large

scale industries employing 740 workers, three medium scale industries with 275 workers

and 645 small and cottage industries with 21 69 workers. These industries are developing

the industrial and business activities in Karaikal region. The gas based power plant, the

activities of Oil and Natural Gas Commission and the proposed industrial growth centre

and a network of educational institutions have also added new dynamism

lQ~ommunity College, Pondicherry University and Institute of Applied Manpower Research, Report an Evaluation of Prime Minister 's Rozgar Yozna 1993 - 94, p.4. -

to the economy of Karaikal. Aquaculture activities and service activities are now

emerging as important activities.

In Mahe. coconut cultivation is a main agricultural activity. Next In

importance is fishing activity. There is no industrial development in this area. There is

only one major spinning mill in this region providing employment to 71 2 persons. The

small scale industries numbering 198 employ 1030 persons. The level of infrastructural

development is fairly high

Yanam region is also prominently agricultural. Paddy and coconut are the

prominent crops. Aquaculture is becoming a profitable venture. People invest huge

capital in prawn culture and they export prawn to foreign countries and earn foreign

exchange. Fishing and small scale industries are the other major economic activities of

this region. There are two large scale", six medium scale and 180 small scale industries

besides 63 cottage industries employing 2672 persons. Regency Ceramics IS a

prominent industry in the region, This region has atttained a fairly considerable level of

development in terms of infrastructure both economic and social.

4.7 Educational Progress

ducati ion all^^^, the territory has made phenomenal progress as that of

Kerala. The Union territory is served by 7 colleges, 58 higher secondary schools, 105

high Schools, 1 16 middle schools, 340 primary schools and 179 pre-primary schools. In

omun unit^ College, Pondicherry University and Institute of Applied Manpower Research, OJ. &., p.4.

12~irectorate of Economics and Statistics, Statistical Handbook 1995-96 - 1996- ?7, G o v m e n t of Pondicherry, Pondicherry,

order to boost up excellence in medical education. two medical colleges including one

dental college are functioning. One college each is functioning in law. engineering.

agriculture. education, nursing and para medical disciplines. There are three polytechnics

besides one technical higher secondary school. In the age group of 6-1 1. 105 per cent of

enrolment is made. In the age group of 11-14 years, 96 per cent of enrolment has been

made. The teacher-pupil ratio for different category o f educational institutions during

1996-97 are given below:

Table 4.4: TEACHER PUPIL RATIO AT DIFFERENT LEVELS OF EDUCATION - 1996-97

S1, No. (1)

Name of the Category (2)

Ratio (3)

Pre-primary schools 1 :49 Primary schools 1 :23 Middle Schools 1 :26 High schools 1 :29 Higher Secondary Schools 1 :29 Colleges 1:16

Source: Directorate of Economics and Statistics, Government of Pondicherry, Statistical Hand Book, 1996-97, Pondicherq.

The average distance of primary school is one sq.krn, middle school i s

two sq.kms and high school is three sq.kms. Due to these favourable factors, the literacy

rate as per 1991 census works out to 74.74 per cent with male literacy at 83.68 per cent

and female literacy at 65.63 per cent. The percentage of literacy has moved from 35.67 in

1961 to 74.74 in 1991.

4.8 Health Status

The tinion Territory presents the spectacle of high health status as

indicated by low Infant mortality rate (IMR), low mortality rate. high per capita

expenditure on health and developed health infrastructure, The IMR has come down due

to systematic pre-natal and post-natal clinical care. During 1997'~. the live birth rate

(Sample Registration System) per thousand is 18.4. The death rate per thousand is 8.0.

The IMR which is a crucial factor to determine the health infrastructure available to

baby care is 22 per thousand. The Territory is served by 8 hospitals, 4 cornunity health

centres, 39 primary health centres, 80 Sub-centres, 12 ESI dispensaries, with 2087

beds14. There is one bed for 474 persons, one doctor for 2083 persons and one nurse for

1283 persons. The percentage of eligible couples covered under family planning is 643.

Adequate care is taken to see that the benefit of health infrastructure goes to rural areas

to take care of preventive and curative aspects. The per capita health expenditure works

out to Rs.551.

4.9 Transport

The Union territory of Pondicherry is well connected by a network of

road transport. Pondicherry Tourism and Transport Development Corporation (PTTDC)

runs buses in all the regions. Private transport operators are given liberal loan facilities

by PIPDIC. Small transport operators belonging to Scheduled Caste are assisted by

Pondicherry Adidravidar Development Corporation (PADCO). Tamil Nadu Transport

13~irectorate of Economics and Statistics, Government of Pondicherry, Statistical Hand Book, 1997-98.

"~irectorate of Economics and Statistics, Government of Pondicherry, Abstract of Statistics. 1994-95 and Pondicherry at a Glance 1998.

Corporation buses are also operated in this linion territory. The length of different

category of roads maintained by Public Works Department is 598.7 krns: 1661 krns

roads by municipalities and commune panchayats. Ariankupparn sea port has come up

in Pondicheny with a loading capacity of 800-1 000 tonnes per day.

4.10 Housing

Welfare activities are covered on a massive scale in this Union territory.

House site pattas are provided at free of cost to the scheduled castes and non-scheduled

caste weaker section people. Adi-Dravidar Welfare and Survey departments eamark

free house site pattas to weaker sections. These departments also provide assistance to

construct houses on the free house sites provided to them. Survey department has

provided house site pattas to 36,374 persons so far, out of which 15,963 persons have got

construction assistance. Besides, Fisheries department provides construction assistance

to fishermen. Town and country planning department identifies slum areas and

develops the same. Every year 10,000 number of beneficiaries are covered in different

localities for providing basic amenities like water tap, sewerage channelldrainage,

construction o f latrines, street lights. The Housing Board construct houses under

Economically Weaker Section (EWS), Low Income Group (LIG) M~ddle Income Group

(MIG) and High Income Group (HIG) and sell houses on a reasonable cost basis. The

"Ind-Bank Housing Limited" and "Can-Fin housing" banks are financing people for

purchase of plots and construction of houses.

4.11 Social Welfare

Women and Children oriented welfare schemes are implemented in the

Union Territory through Social Welfare and Women and Child Development

78

departments. Five Integrated Child Development ~rojects'%and 677 Anganwadi centres

are the outlets through which benefits tlow to them. Po~ldicherry Women Development

Corporation (PWDC) has also been recently set up to take care of the felt needs of the

rural and urban womenfolk to improve their standard of living by raising their earning

capacity by imparting various skills. Bank finance is also arranged by this Corporation

to the beneficiaries.

4.12 Public Distribution System

The public distribution system is functioning fairly well. There are

392 Fair Price Shops (FPS) hnctioning in all the four regions of the Union Territory.

The average distance per FPS works out to 1.26 sq.km. The average number of total

cards per FPS works out to 639. There is a well knit and integrated functioning of FPS

in this Union Territory. Essential commodities like rice, wheat, edible oil are

distributed through these outlets. Kerosene which is a cooking input is distributed

through 378 outlets,

4.13 Service Sector

The role of services sector has been increasing in the Union Territory o f

Pondicheny due to various factors. Services sector is an area where the scope for

employment is greater, The contribution of Service Sector to the Net State domestic

product (NSDP) has increased over the years. The percentage share in service sector has

15~ocial Welfelfare Department , Government of Pondicherry - Annual Report, 1993-94.

increased from a mere ?5.7516 in 1980-81 to 60.24 in 1996-97. &hereas the share under

primary and secondary sectors has come down. Various Government sponsored and

bankable schemes and flow of credit from institutional finance have made the service

sector more attractive in Pondicherry economy

4.14 Banking

Banking Sector has made tremendous progress in the Union Territory of

Pondicherry. At the end of March 1999" there are 78 Commercial bank branches. 19

branches of PSCB and one branch of PLDB are functioning to meet the credit needs of

various segments of the economy.

Massive bank branch expansion has taken place due to increasing

industrial and service activities. The spurt in export potential and the increased saving

habit of rural and urban population, have increased the bank branch expansion. By

~arch'99" deposit has grown up to Rs.967 crores and the advances have gone up to

Rs.347 crores.

Per capita deposits and Per capita advances are true indicators to

determine the relationship between the mobilisation of deposits and advancing of credit

by banks. The per capita deposits and per capita advances show increase over the years

in the Union territory af Pondicherry. The per capita deposits had gone up steeply fiom

Rs.128 in 1970 to Rs.8'060 in 1996 indicating an increase of 62.97 times. The per caprta

16~irectorate of Economics and Statistics, Government of Pondicherry - Statistical Hand Book, 1997-98, Abstract of Statistics, 1994-95, Pondicherry at a Glance, 1998. -

"Indian Bank (Lead Bank), Union Territory of Pondicherry, Agenda Papers for the State Levd Barkers Committee Meeting, August 1999.

"~eserve Bank of India, Mumbai,, Quarterly Handout. March. 1999.

advances had gone up from Ks.134 to Rs.3,379 for the same period indicating an

increase of only 25.22 per cent.

Besides, the growth of scheduled commercial banks, the growth of Non-

Banking Financial Companies (NBFC) is phenomenal. Chit Funds. Nidhi Limited and

other related financial institutions have also come up in large numbers in this Union

territory. Indian Bank is the Lead Bank for the Union territory which prepares and co-

ordinates the implementation of Annual Credit Plan (ACP) of commercial banks and

Co-operative banks in a joint effort to supplement the efforts of State Administration.

Government sponsored schemes IRDP, PMRY are implemented in close collaboration

with all banks. The expenditure under the ACP '~ increased from Rs. 12 15.03 lakhs in

1980 to Rs.8146.92 lakhs in 1997 - 98. National Bank for Agriculture and Rural

Development (NABARD) and Small Industrial Development Bank of India (SIDBI) are

extending refinance facilities to commercial banks at concessional rate of interest, to

help banks to lend adequately to the needy and priority segments.

4.15 Pondicherry Planning

The Union Territory of Pondicherry has joined the mainstream of national

planning only in the last year of the First Five Year Plan, that is, in 1955-56. After the

de-jure merger with the Indian Union, liberal grants were given to this Union Territory

by Government of India which has enabled this territory to have good infrastructure

facilities like road, educational institutions, health care. The introduction of planning in

the Union Territory of Pondicheny has brought a sea change. The Union Territory of

"~ndian Bank (Lead Bank), Union Territory of Pondicheny - District Credit Plan a d AnnudCredit Plan 1980-81 - 1998-99.

Pondicherry can boast that it has comparable facilities as that of advanced States. This

\bas possible because of pumping of liberal central assistance so as to enable it to enjoq

the fruits of planning. The plan expenditure slnce Second Five-Year Plan in the Union

Territory of Pondicherry is given below:

Table 4.5: PLAN EXPENDITURE UNDER VARIOUS FIVE YEAR PLANS AND ANNUAL PLANS

(Rs. in Lakhs)

S1, No. Plan period Expenditure (1) (2) (3)

First Plan (1951-56)

Second Plan (1 956-61)

Third Plan (1 961-66)

Fourth Plan (1 969-74)

Fifth Plan (1 974-79)

Sixth Plan (1980-85)

Seventh Plan (1 985-90)

Eighth Plan (1 992-97)

Annual Plan (1997-98)

Source: Planning and Research Department, Government of Pondicherry, Five Year Plan and Annual Plan Documents, Various Years, 196 1-62 to 1998-99.

The expenditure incurred during the second Five-Year Plan in the Union

Territory of Pondicherry was Rs.339.27 l a k h ~ ~ ~ . This has almost doubled to Rs.603.27

lakhs. During the fourtb Five Year Plan, the expenditure has gone up to Rs.1436 04

lakhs. Within a span of eighteen years that i s fiom 196 1 - 1979, the expenditure has gone

up by 4.23 times. During the Fifth, Sixth and Seventh Five year plan periods, the

20~lanning and Research Department, Government of Pondicherry - Annual Plan 1999-2000 pJii.

expenditure was in the order of Rs.345.11 Eakhs, Rs.9896.77 lakhs and Rs.23255.82

lakhs respectively.

During the Eighth Five Year Plan. the expenditure incurred was

Rs.69871.23 lakhs. This shows a steady and fast increase in plan expenditure due to

liberal Central assistance given by Government of India. A remarkable feature of

planning in the Union Territory of Pondicherry has been that Pondicherry administration

could spend 98 to 99 per cent of the total outlay under plan. The per capita plan

expenditure in the Union Territory of Pondicherry is Rs.2164.24 in 1997-98 The

objectives of planning in all the Five-Year Plans and the objectives of bank

nat~onalisation are almost same as far as assisting the economically weaker sections are

concerned. The ACP implemented under the LBS is an excellent mechanism to

supplement the governmental efforts.

4.1 6 Budget

The Union Territory ~ u d ~ e t ~ ' for the year 1999-2000 (Budget Estimate)

is Rs.838.56 crores, which comprises a plan allocation of Rs.264.63 crores, non-plan

allocation of Rs.573.93 crores. Out of the total budgetary provision of Rs.838.56 crores,

grants-in-aid given by Government of India is Rs.304.07 crores, which works out to

36.26 per cent of the total Union Territory budget. The Union Territory budget consists

of development and non-development expenditure. Three-fourth of the expenditure

forms development expenditure and the remaining one-fourth constitutes non-

developmental expenditure. In 1960-6 1, the percentage of development and non-

21 Government of the Union Territory of Pondicherry, Demands for Grants for 1999-2000 Parts III and R), Page VI to XUI, March 1999.

development expenditure to the total expenditure was 75.1 1 per cent and 24.89 per cent

respectively. For the year 1999-2000 (Budget Estimate). the share of de~~elopmental

expenditure is 75.68 per cent and of non-developmental expenditure is 24.32 per cent.

4.1 7 Conclusion

A review of the profile in the proceding pages reveals that the Union

Territory of Pondicherry is equipped with considerable Socio-economic infrastructure

and healthy economic system. The social and economic progress of the Union Territory

since its merger appears to be rather considerable. The banking sector has developed in

the background of a developed State. Both banking and non-banking sectors appear to

have grown simultaneously contributing to the development of the State. With this

background , an analysis of the banking progress has been made in the chapter that

follows.