Credit growth starts inching up, centre approves Stand Up India scheme


There was much positive news on India data front in the past week, as credit offtake showed faster growth in December 2015 than that in the corresponding period of the previous year – the first time in 2015-16 so far. Moreover, it showed the second consecutive fortnight of 11% plus credit growth. SEBI data on corporate bond issues also shows a return of appetite among Indian corporates, with healthy growth in both the number and size of issues.

There was further improvement in the area covered under the Rabi crop, as measured by the shrinking lag from last year. The Ministry of Power gave an update on progress in rural electrification, with 160 villages having been electrified in the first week of January alone, across various states.

As per the World Bank’s latest forecasts, too, the Indian economy is expected to grow at the fastest rate among major world economies at 7.3% in 2015 and 7.8% in 2016. While the bank has cut its overall growth forecasts for both years, the softening in growth expected in India is likely to be much lesser than for emerging economy peers like Brazil and Russia.

On the policy front, the Union Cabinet approved the creation of a credit guarantee fund, the MUDRA bank and also gave a go ahead for the Stand Up India scheme. While the credit guarantee fund and MUDRA bank were first announced during the last budget, the Stand Up India scheme was announced during the PM’s speech on the previous Independence Day. All three initiatives are geared towards supporting the small entrepreneur, and particularly SC/ST and Women Entrepreneurs, through provision of a target number of loans, and handholding support for them.

The FM stated that the government will continue public spending next year as well, despite pressure on its resources, during a pre-budget consultative meeting.

This is an Executive Summary of the Orbis Economics's weekly report - India Macro Weekly. To know about subscription, write to orbis.economics@orbiseconomics.com

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