The sectoral credit data is on expected lines post demonetisation..

RBI may be refusing data on demonetisation but is thankfully releasing data on monetary variables regularly.

It released the sectoral credit data for Dec 2016.

  • On a year-on-year (y-o-y) basis, non-food bank credit increased by 4.0 per cent in December 2016 as compared with an increase of 9.3 per cent in December 2015.
  • Credit to agriculture and allied activities increased by 8.2 per cent in December 2016 as compared with an increase of 12.7 per cent in December 2015.
  • Credit to industry contracted by 4.3 per cent in December 2016 in contrast with an increase of 4.9 per cent in December 2015. Major sub-sectors which witnessed deceleration/contraction in credit include food processing, infrastructure, chemical and chemical products, all engineering, textiles and basic metal and metal products.
  • Credit to the services sector increased by 8.3 per cent in December 2016 as compared with an increase of 8.1 per cent in December 2015.
  • Personal loans increased by 13.5 per cent in December 2016 as compared with an increase of 18.5 per cent in December 2015.

One just plotted the data of the sectors. You see a slowdown in all the sectors as we move in the year 2016 and sharply since the demon.

Non-food Credit (Total) Agriculture & Allied Activities Industry (Micro & Small, Medium and Large) Services Personal Loans Priority Sector
Apr-16 8.4 15.3 0.1 10.9 19.7 11.2
May-16 8.4 15.6 0.9 9.3 19.1 11.7
Jun-16 7.9 13.8 0.6 9.2 18.5 9.7
Jul-16 8.3 13.4 0.6 10.8 18.8 9.9
Aug-16 8.2 13.6 -0.2 12.1 18.1 9.4
Sep-16 10.8 15.9 0.9 18.4 19.7 11.4
Oct-16 6.7 13.0 -1.7 9.3 17.0 8.3
Nov-16 4.8 10.3 -3.4 7.1 15.2 5.8
Dec-16 4.0 8.2 -4.3 8.3 13.5 4.1

 

In the industry, if we look at small, medium and large seperately, we see credit growth in negative for small industry throughout the year so far. It looked like recovering in Sep-16 but has again slipped from Oct-16 onwards.

Industry (Micro & Small, Medium and Large) Micro & Small Medium Large
Apr-16 0.1 -6.7 -14.0 2.2
May-16 0.9 -6.5 -12.7 3.1
Jun-16 0.6 -3.8 -9.5 2.0
Jul-16 0.6 -3.3 -8.7 1.7
Aug-16 -0.2 -3.7 -5.5 0.7
Sep-16 0.9 -1.2 -2.6 1.4
Oct-16 -1.7 -4.3 -3.6 -1.2
Nov-16 -3.4 -7.7 -10.1 -2.3
Dec-16 -4.3 -8.2 -7.9 -3.5

This credit indicator is one of the most important to watch out. Despite buoyant government data, this one is closer to the private estimates..

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One Response to “The sectoral credit data is on expected lines post demonetisation..”

  1. Linkfest - Kairos Capital Says:

    […] Credit trends on demonetisation (Mostly Economics) […]

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