Indian Economy Sees 16.3% YoY Credit Growth in June 2023, Led by Acceleration in Key Sectors

Strategic Insights -

The Indian economy witnessed a 16.3% year-over-year (YoY) growth in non-food bank credit, excluding credit extended to the Food Corporation of India, in June 2023. This growth rate accelerated from 15.6% in May, driven by increased credit to agriculture, industry, services, and personal loans. Notably, credit growth to agriculture jumped from 16% to 20%, while industry and services sectors saw a rise from 6% to 8% and 21% to 27%, respectively. Personal loans also experienced a 2% increase from 19% to 21%.

Key Takeaways:

  • The acceleration in credit growth was led by agriculture, industry, services, and personal loans, with growth rates increasing from 15.6% in May to 16.3% in June.
  • Credit to agriculture grew from 16% to 20%, indicating a significant increase in credit availability for the sector.
  • Industry and services sectors also experienced a rise in credit growth, from 6% to 8% and 21% to 27%, respectively.
  • The credit deployed to industry in January-June 2023 totaled Rs1.3trn (US$16.4bn), similar to Rs1.4trn deployed in the same period of 2022.
  • The moderation in the cost of working capital for industries has been partly offset by higher interest rates, which have raised debt-servicing costs.
  • Credit deployment for food processing, beverages, textiles, and cement accelerated in the first half of 2023, driven by strong demand.
  • The revival in private investment in industry is expected to be concentrated in sectors such as infrastructure and automotive, with a broader revival taking effect from 2024.
  • Credit to the services sector in January-June 2023 totaled Rs2.4trn, higher than in the first half of 2022, driven by robust offtake in the retail trade, commercial property, and transport sectors.

Statistics:

  • 16.3% YoY credit growth in June 2023, compared to 15.6% in May.
  • Agriculture credit growth increased from 16% to 20%.
  • Industry credit growth rose from 6% to 8%.
  • Services sector credit growth increased from 21% to 27%.
  • Credit deployed to industry in January-June 2023 totaled Rs1.3trn (US$16.4bn).
  • Credit to the services sector in January-June 2023 totaled Rs2.4trn.
  • Personal loans grew from 19% to 21%.

Sources:

  • Reserve Bank of India (RBI), "Data released on July 31st"