Bank credit growth is seen as a leading indicator of growth in the economy, and ideally it should be ahead of the growth in the nominal GDP. But in FY15, for the first time since FY97, non-food credit growth will be lower than India’s economic growth.
While non-food credit growth fell to 10.4% yoy in the fortnight ended March 6 to R64.26 lakh crore, nominal GDP is likely to grow 11.5% in FY15, as per CSO’s advance estimates. In FY97, non-food credit growth was 10.9% yoy, while the GDP grew 15.7% yoy. Even during the peak of the global economic crises in FY09, credit growth surpassed India’s nominal economic output growth. So, credit numbers would be keenly watched in the next few quarters to get a hang of growth scenario.
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