Prime Minister Manmohan Singh had called upon the industry to ?tighten their belts? and help the government in its war against inflation on Tuesday.
Whether industry responds to the PM?s call or not, consumers are already tightening their belts, it seems.
Growth in public sector banks? personal loan portfolios has slowed down dramatically, in a clear sign that consumers are avoiding conspicuous consumption and focusing on essential expenditure.
Personal loans grew by a mere 13.2% in February 2008, as opposed to over 25% growth in Feb 2007. In March 2008, the growth rate slipped further to just above 10%. Though total bank credit has seen considerable moderation in 2007-08 due to deliberate measures taken by the Reserve Bank of India, the personal loan category has been hit the most.