Growth in non-food credit has slowed from 22.7% year-on-year in early May to 19.7% in mid-August. The Reserve Bank of India’s measures to decelerate the economy are having an impact. However, the central bank is unlikely to be enthused by the pace of deceleration. Its target for non-food credit growth for the current fiscal year is much lower, at 18%. It’s yet another indication that while the economy is slowing, growth is still very strong. Taken together with stubbornly high food inflation—which was 9.8% on 13 August, higher than a week ago—the central bank will continue to be worried about the inflationary pressures in the economy, reducing the odds for a change in its tight money stance.
Also See | Credit growth slows, but not enough (PDF)
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