The Reserve Bank of India’s Financial Stability Report provides clues about sectors of the economy that are improving and those that are not.

The accompanying Chart 1 shows that banks’ stressed assets to agriculture (as a percentage of total loans to the sector) have come down after the two-year back-to-back drought ended.

There is, however, a wrinkle—stressed loans to agriculture have risen since March 2017. It’s an indication of rural distress.

The stress in industry continues to get steadily worse. Chart 1 shows that banks’ stressed loans now account for almost a quarter of their advances to industry.

Chart 2 shows the major industrial sectors that are the worst affected. The figures in parentheses are the share of the credit to the sub-sector in total credit to industry. By that yardstick, the most important sub-sectors are infrastructure and basic metals.

Chart 2 shows that stress has increased in infrastructure, engineering, food processing and construction sectors.

The good news is that stressed assets are coming down in the services sector, while retail loans’ asset quality remains robust.