Bank credit rises as economy picks up

India’s bank credit –an important indicator of economic activities—has remained robust. According to the Reserve Bank of India data released last week, credit to industry rose by 12.6 per cent in September 2022 as compared with 1.7 per cent in September 2021.

Credit to large industry accelerated to 7.9 per cent against a contraction of 2.1 per cent a year ago, when the country was in the grip of Covid 19 pandemic impact.

The RBI data showed that medium industries recorded credit growth of 36.2 per cent in September 2022 as compared with 37.1 per cent last year, while credit to micro and small industries rose by 27.1 per cent

Driven by festive season demand, India’s retail loan also grew at a healthy 20 per cent in September, the highest since the outbreak of the pandemic in 2020, despite higher interest rates.

A report by Motilal Oswal Financial Services Limited (MOFSL) noted that contrary to the expectations of weakness in September, its in-house estimates have indicated that the economy performed better, which could push overall GDP growth of the country in the second quarter.

Meanwhile, analysts said that India’s continued focus on reforms and infrastructure development has enabled the country to strengthen its economic fundamentals and push GDP growth.

While the International Monetary Fund (IMF) slashed India’s growth projection from the earlier 7.4 per cent to 6.8 per cent, it will be the fastest growing major economy in the world. The Narendra Modi government is however expecting to touch a growth rate of about 7 per cent for the current financial year.

The whole world is looking at India with great hope during this turbulent time of global uncertainties because the country’s economic fundamentals are robust and its political leadership is strong, a senior official earlier noted.

India’s retail inflation, despite the surge in global crude oil prices, in the first six months of the current fiscal year stood at 7.2 per cent lower than the world inflation of 8 per cent as represented by the median inflation of major economies.

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