Firstpost
  • Home
  • Video Shows
    Vantage Firstpost America Firstpost Africa First Sports
  • World
    US News
  • Explainers
  • News
    India Opinion Cricket Tech Entertainment Sports Health Photostories
  • Asia Cup 2025
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
Trending:
  • Nepal protests
  • Nepal Protests Live
  • Vice-presidential elections
  • iPhone 17
  • IND vs PAK cricket
  • Israel-Hamas war
fp-logo
At 10.8%, growth in infra credit is back to FY15 levels; economy is riding on the back of govt spending
Whatsapp Facebook Twitter
Whatsapp Facebook Twitter
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
  • Home
  • Business
  • At 10.8%, growth in infra credit is back to FY15 levels; economy is riding on the back of govt spending

At 10.8%, growth in infra credit is back to FY15 levels; economy is riding on the back of govt spending

Dinesh Unnikrishnan • March 21, 2019, 09:01:04 IST
Whatsapp Facebook Twitter

Its not just infrastructure loans, overall lending to industry too has shown a reviving trend after staying in the negative for two consecutive years.

Advertisement
Subscribe Join Us
Add as a preferred source on Google
Prefer
Firstpost
On
Google
At 10.8%, growth in infra credit is back to FY15 levels; economy is riding on the back of govt spending

Does a recent spike seen in bank lending to infrastructure offer early signs of recovery in the economy? In the first nine months of financial year 2019, credit growth to infrastructure sector stood at 10.8 percent, growing at double digits after a gap of four years. For clarity, let’s look at the growth figures in the previous years. In financial year 2018, credit growth to infrastructure contracted by 1.7 percent, in FY17 by 6.1 percent and in FY 16, infra credit grew by 4.4 percent. In FY 15, the growth was 10.5 percent and that’s the point to which growth has returned now. Its not just infrastructure loans, overall lending to industry too has shown a reviving trend after staying in the negative for two consecutive years. Credit to industries grew by 1.9 percent in the first nine months of this fiscal year. While this is no significant jump, one must remember that the credit growth to industries was flat in FY 18 (0.7 percent) and was negative in FY17 (-1.9). [caption id=“attachment_2296472” align=“alignleft” width=“380”] ![Representative image. Reuters](https://images.firstpost.com/wp-content/uploads/2015/06/infrastructure_reuters.jpg) Representative image. Reuters[/caption] One reason why banks shut doors to industry in recent years was risk aversion following increased scrutiny by the Reserve Bank of India (RBI). Following the NPA-clean up programme and punitive provisioning imposed on banks which failed to disclose bad loans, banks were more keen to focus on low-risk retail loans instead of large non-retail loans. Lower demand in a slowing economy and absence of fresh private investments in large projects too added to low credit off take. Banks may, however, be re-looking at these projects again with much of the pains behind them and government’s infra push has contributed to the revival. Contradictory signals What is puzzling is that while there is a revival in bank credit to infrastructure and industries, suggesting recovery in economic activity, that revival signal is not shown in the factory output numbers. Since June, 2018 (7 percent), the Index of Industrial Production (IIP) has been falling consistently, with the only exception being October, 2018 when the index recorded a sudden spike of 8.4 percent. In January, 2019, when the latest set of the IIP data was out, the reading was 1.7 percent. There are no signs of demand-revival yet. Recently, the country’s leading car manufacturer Maruti Suzuki reportedly slashed production by nearly 27 percent in March due to sluggish demand in passenger car market and tougher emission norms, which are to come into effect from next year. Maruti Suzuki has reportedly cut its car production by 26.8 percent to about 126,000 units in March as compared to more than 172,000 units during the same period a year ago. A number of ground reports also show that an unemployment crisis is unfolding in India. Having said that a revival in bank credit growth to infrastructure sector for projects primarily funded by the government after a fairly long lull phase tells us two things. One, there is some pick up in investment activity in the labour-intensive infrastructure sector on the ground which is a positive news for the economy. Second, it is even more clearer now that the onus to bring back the growth momentum in the economy rests with the public sector, since most of these infrastructure projects that have caused a revival in the credit demand are funded by the government; there is no aggressive participation from the private sector. At this point, government spending is the primary factor that is supporting the economic recovery. (With data support from Kishor Kadam)

Tags
NewsTracker InMyOpinion Credit Growth bad loans bank loans factory output retail loans Economic Recovery bank lending infrastructure sector unemployment crisis
End of Article
Latest News
Find us on YouTube
Subscribe
End of Article

Impact Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

The Tata Harrier EV and Mahindra XEV 9e are new electric SUVs in India. The Harrier EV has a modern, familiar design, while the XEV 9e features a bold, striking look. They cater to different preferences: the Harrier EV for subtle elegance and the XEV 9e for expressive ruggedness.

More Impact Shorts

Top Stories

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Who is CP Radhakrishnan, India's next vice-president?

Who is CP Radhakrishnan, India's next vice-president?

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Who is CP Radhakrishnan, India's next vice-president?

Who is CP Radhakrishnan, India's next vice-president?

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Top Shows

Vantage Firstpost America Firstpost Africa First Sports
Latest News About Firstpost
Most Searched Categories
  • Web Stories
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Tech/Auto
  • Entertainment
  • IPL 2025
NETWORK18 SITES
  • News18
  • Money Control
  • CNBC TV18
  • Forbes India
  • Advertise with us
  • Sitemap
Firstpost Logo

is on YouTube

Subscribe Now

Copyright @ 2024. Firstpost - All Rights Reserved

About Us Contact Us Privacy Policy Cookie Policy Terms Of Use
Home Video Shorts Live TV