Non-food credit during the first half of the current fiscal year grew by Rs 5,841 crore as on 24 September, 1999 as compared to a growth of Rs 3,017 crore in the comparable period of the last fiscal. Bank's investements in commercial paper (CP) during the period grew by Rs 1,984 crore (Rs 2,801 crore)l. Investments in bonds and debentures of public-sector undertakings (PSUs) and corporates was also down in the current fiscal with investments growing by Rs 3,077 crore (Rs 5,254 crore). Taking into account bank's investments in equity shares of PSUs and piivate companies and bills discounted by financial institutions (FIs), credit offtake grew by Rs 11,117 crore (Rs 11,331 crore as on 25 September, 1998).

Deposit accretion in the fiscal (24 September, 1999) was Rs 47,653 crore, significantly lower than the Rs 63,174 crore recorded in the corresponding period last fiscal. However, adjusted for the Rs 17,945 crore Resurgent India Bond (RIB) collection last year, deposit accretion is marginally higher this year.

As a result of the sluggish growth in credit, investments by banks in government securities went up during the first six months of the current fiscal. Investements grew by Rs 35,677 crore to Rs 2,89,596 crore from Rs 2,54,119 crore as on March 26, 1998.

Reserve money has grown by 11.7 per cent and broad money (M3) at 16.2 per cent during the first six months of the current fiscal, which is slightly higher than the targeted band of 15.5-16 per cent.

The growth in money supply comes at a time when industrial production has picked up from the lows of the last two years and the overall gross domestic product (GDP) growth is expected to be at 5.5 per cent this fiscal.

Agriculture:

Erratic rainfall during the last couple of months has impacted the Kharif crop adversely. Though 28 out of 35 meteorological sub-divisions recorded normal to excess rainfall during the last four months, many of these regions experienced prolonged dry spells. As a result, lower production is expected in many crops, especially cash crops such as groundnut and cotton. Rice output is expected to have improved a bit on higher acreage. The sugarcane cycle continues to be on the upswing and output is expected to increase by 5 per cent. On the whole, crop output is expected to grow by 1-1.5 per cent this year.

Industry:

The much hoped for industrial upturn continues to be concentrated in a few sectors like cement, automobiles and steel. Cement despatches have grown 21 per cent in the first five months; commercial vehicle sales by 22 per cent; and finished steel production by 6 per cent.

The end-use of cement despatches appears to be the housing sector in the abscence of any large infrastructure spending. Production of capital goods has risen 10.4 per cent. The data is skewed by high growth in some industries like telecom cables (over 100 per cent) on the back of big government orders. Capacity utilisation continues to be low in segements like machine tools, boilers and electric generators.

Services:

Services sector shows economic growth. Cargo handled at major ports gas increased by 8.8 per cent in the period April to July over the corresponding period last year while revenue earning goods traffic on the railways grew 9 per cent. According to CII estimates, air cargo has registered a growth of 13.2 per cent in the first half of this year.