Mumbai: Reflecting the deepening economic crisis arising from both structural and cyclical issues and a massive fall in consumption demand, bank credit growth rate, for the first time this fiscal, slowed to single digit at 8.8 percent to Rs 97.71 lakh crore during the fortnight to September 27, according the Reserve Bank of India data.
In the first fortnight of the fiscal ending April 12, the credit demand grew 14.19 percent after closing the previous fiscal at 13.24 percent.
Throughout this fiscal so far, credit growth has been in the low-double-digit.
On Thursday, global rating agency Moody’s slashed its GDP growth forecast to 5.8 percent from 6.2 percent earlier.
The downward revision came in after the first quarter GDP printed at a six-year low of 5 percent forcing a “surprised” RBI to massively slash its forecast by a full 80 bps to 6.1 percent within a span of just two months and by 140 bps from its April forecast.
Since the Q1 GDP, there has not been any positive data coming out, barring inflation, which remains tamed. Be it IIP numbers or exports or core sector data, everything has been heading south month after month.
On top of it, tax collections, both direct and direct, have also been sprinting down. While income tax collection during the first half just inched up 5 percent against a budgeted estimate of 17.5 percent, the all important GST collection has never touched the desired Rs 1-lakh-crore-mark barring in April.
Amidst all these negative news flows, the government has given away as much as Rs 1.45 lakh crore to the corporates by way of a massive reduction in corporate tax rates with retrospective effect from April 1, putting a big question mark on the government ability to meet the fiscal deficit targets of 3.3 percent.
Slashing the growth forecast, Moody’s said the economy is experiencing a pronounced slowdown which is partly related to long-lasting factors.
New IMF Kristalina Georgieva earlier this week opined that India is experiencing “more pronounced” effect of the global downturn.
Credit demand has slowed to single digit as the mainstay of banks-personal loans and demand from services sector lost their momentum.
While credit growth rate to the services sector more than halved to 13.3 percent in August from 26.7 per cent a year ago, personal loans growth also moderated to 15.6 percent in August from 18.2 percent in August 2018.
The only silver lining was demand from the industry, which more than doubled to 3.9 percent in August from 1.9 percent in August 2018.
In the fortnight to September 27, deposits growth too slowed to 9.38 percent to Rs 129.06 lakh crore from Rs 118 lakh crore a year ago.
On annualized basis, non-food credit growth decelerated to 9.8 percent in August 2019 from 12.4 percent in August 2018.
Loans to agriculture & allied activities increased 6.8 percent in August compared to an increase of 6.6 percent last year same month.
Also read: With no end to credit woes, Modi govt under pressure to take new steps to revive growth
fact is that DEmon was conducted to target the cash hoarding by oppn parties in UP . and present a holy attitude of the Lords …
fact is that DEMon killed many small business and maimed many .
fact is many people asked the govt to think thro the implementation of GST and not raise the service tax element .
Fact is the 10 % service tax is now 18 % and soon M sarkar will cut down the tax and claim credit ..and win more votes.
Fact is middle class is burdened with high taxes and hidden inflation that cuts down the demand..
the reduction is corporate tax is again an act of pleasing the corporate houses who provide funding to the M sarkar ..
corporate tax reduction is not increasing demand and filling up rich man pockets .
media houses are either bought out or scared to criticize the M sarkar ……………..
under similar circumstances if congress led coalition would have been in power the oppn would have burnt th streets with protest .
and now a muted feeble mumble
There is hardly anything new or extraordinary that is said by RRR, given that he is a world renowned economist and we expect lots of wise thoughts from him. He has been talking on Indian economy from time to time but beyond saying what is wrong with the Indian economy, he has not said anything which can be converted into specific policy actions. We could then look to implement his suggestions and of course, hold him accountable. In this context, he is in effect, simply taking political potshots at Modi. This by itself is fine but then we should also treat him as any other Modi baiter (or biter!) rather than a world renowned economists, who presciently predicted 2008 financial crisis.
A news report published on 9 October 2019 has relayed the opinion of IMF Chief Kristalina Georgieva on global economy in the present year 2019. She is reported to warned that global economy is witnessing “ synchronized slowdown” which will result in slower growth in 90 percent of the world in 2019. And she is reported to have further warned that effects of global slowdown may be more pronounced in India during the year 2019. In this context , it is apt to refer readers to this Vedic astrology writer’s predictive alerts covering , among other aspects , economy also for more care and appropriate strategy in hitherto well-known article – “ The year 2019 astrologically for India” – published at theindiapost.com , as early as last year 2018 on 7 October. Briefly speaking , slowdown likelihood in economic and financial sector for India was clear in the alert of said article. Similar alert was sounded by this writer through another article – “ World trends in April to August 2019” – brought to public domain widely in March and subsequently on 5 April 2019. Now , in the remaining three months of 2019 and first half of coming year 2020 looks to be not making any difference , rather scenario looks to be getting more serious during April to June , 2020 , calling for more care and appropriate strategy. It seems second half of 2020 may attempt to address some of worrisome concerns to “ an extent” with some success. This Vedic astrology writer’s predictive alerts for India in coming year 2020 , published on 10 October , 2019 , can be visited at theindiapost.com/articles/predictions-for-coming-year-2020-by-kushal-kumar/