The country’s grand November credit bubble should worry us4 min read . Updated: 17 Nov 2020, 08:46 PM IST
A steep rise in personal loans over the festive season, coupled with stagnant credit to industry, portends a surge in defaults
The festival and wedding season is under way in full swing. Optimism is in the air, with the Sensex at an all-time high. Post Joe Biden’s victory in the American presidential election, capital is flowing into India, bolstered by hopes of Pfizer’s vaccine rolling out soon. Finance secretary Ajay Bhushan Pandey in an interview pointed to a rise in goods and services tax receipts in September and October, and e-way bills in October, as indicative of a robust recovery. Many noted economists and columnists have concluded likewise. Since these increases are year-on-year, not monthly or quarterly, they have emphasized that these data do not reflect the immediate bounce-back after the lifting of India’s lockdown, but capture the longer term momentum of the economy. Whether this is sustainable remains to be seen.