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Gujarat makes little use of the banking system. For a state that boasts of a large entrepreneurial class, this is surprising. According to the 2011 Census, only 57.9% of the households in Gujarat access banking services. This is lower than the national average of 58.7%. Banking statistics sourced from the Reserve Bank of India confirm Gujarat's poor record on financial inclusion.
The per capita outstanding bank credit in Gujarat is lower than the all-India average. Delhi and Maharashtra top the states in terms of per capita bank credit. This is understandable given that Delhi is the seat of most large public sector enterprises and Mumbai is the business capital of India. What is surprising is the distance between these leaders and Gujarat.
Per capita bank credit in Gujarat, at R31,935 in 2010-11, was lower than the all-India average of R33,667. It was nearly one-tenth of Delhi's R3,06,141 and nearly one-third of Maharashtra's R96,974. Even Tamil Nadu and Punjab, with over R50,000, and Haryana and Karnataka, with over R40,000 of per capita bank credit, were way ahead of Gujarat.
The detailed break-up of bank credit shows that Gujarat manages a better-than average performance only in terms of industrial bank credit. Even in this case, Gujarat is not the leader—it is merely above the average. It ranks fifth after Delhi, Maharashtra, Punjab and Tamil Nadu. The per capita outstanding industrial credit in the latter two is over 30% higher than Gujarat's. Maharashta's per capita outstanding industrial credit is 2.4 times higher and Delhi's is 7.7 times higher than Gujarat's.
Gujarat does not lead in terms of industrial credit in any specific industry either. It does not lead in chemicals or petroleum or even gems and jewellery. Although Gujarat has the largest petroleum refinery and the largest total refining capacity in the country and although these are capital intensive, they do not borrow from commercial banks.
Gujarat's borrowing for petroleum refining is lower than Maharashtra's and Tamil Nadu's besides Delhi's. This is possible if Indian Oil Corporation borrows in Delhi or Maharashtra and not in Gujarat. But, what is surprising is that Gujarat does not even lead in gems and jewellery or textiles.
The case of gems and jewellery is particularly striking. The total outstanding bank credit to the gems and jewellery sector in Gujarat was R7,422 million as of March 2011. At the same time the outstanding credit for the same industry in Andhra Pradesh was