Following up from yesterday’s
post, we explore the nitty gritties of the industrial credit slowdown. This is
important for two reasons, one, as mentioned before, overall credit growth is
being dragged down largely by the decline in industrial credit. While other
credit segments have also witnessed a softening in growth, industry has seen a
reversal. It is no wonder then, that credit offtake ex-industry is still
witnessing a double digit growth of almost 11.5% while total credit offtake
grew by 5% in January 2017. Two, industry accounts for the largest share of
total credit of 35%, which means that overall credit is most sensitive to
changes in industrial credit patterns.
Drilling down to industry
sub-segments reveals that the largest component – infrastructure – leads the
overall decline in industrial credit. Accounting for a share of almost 35% in
industry credit, this segment has seen a decline of 8.7% in January 2017. All
in all, industrial segments with a 66.4% share in total industry credit have
shown a decline during the month. This includes segments like textiles,
engineering, chemicals, food processing among others. The sharpest decline has
been witnessed in the food processing segment, followed by mining and quarrying
and the glass industry.
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