India’s policy makers will have reasons to cheer in the new year. The Reserve Bank of India’s data showed that credit growth to industry increased by 13.1 per cent year on year in November from a mere 3.4 per cent recorded in the same month in the previous year. Overall, non food credit growth stood at 17.6 per cent in November 2022 compared to 7.1 per cent in the same month a year ago.

A high credit growth is an indicator of robust economic activities. This is particularly crucial for India as it looks to focus on growth while settling into the post Covid phase amid rising geopolitical tensions driven by the Russia-Ukraine war.

Credit to large industry rose by 10.5 per cent against a contraction of 0.6 per cent a year ago. Medium industries too recorded credit growth of 29.7 per cent in November. However, in the corresponding month in 2021-22 it was 37.4 per cent. Credit to micro and small industries too went up by 19.6 per cent compared to 15.3 per cent in November 2021-22. Agriculture loans too showed a healthy growth.

Last month, the RBI lowered India’s growth forecast to 6.8 per cent for the current fiscal year from the earlier 7 per cent. However, RBI Governor Shaktikanta Das said that India’s growth story continues to be strong. The World Bank revised upward India’s growth projection from 6.5 per cent to 6.9 per cent.

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