A report by the Department of Economic Affairs (DEA) claims that various signs of economic improvement were seen in India in the month of September. The report also gives credit to the packages put forward by the government.
The ‘Monthly Economic Review’ for September 2020 cited the estimated growth in the Kharif foodgrain output for 2020-21 to show a recovering economy.
“The implementation of Aatmanirbhar Bharat (AB) package and unlocking of the economy have ensured that economic recovery in India has gained momentum. This is seen in agriculture with production of kharif foodgrains in 2020-21 estimated to go past the previous year’s level,” it said.
It noted that the growth of demand in the rural sector is reflected in registration of two wheelers, three wheelers and passenger vehicles along with tractor sales reaching or surpassing previous year levels in August.
Automobile sales largely recorded improvement last month compared to September 2019, a major reason being the low base – low sales during the year ago.
The report also said that other high-frequency indicators have also improved in sync with global activity. Increase in global demand has led to expansion of India’s export at 5.3 per cent in September on YoY basis, it added.
The recovery in rail freight enabled revenue earnings clocking positive year-on-year growth for the first time since March in the months of August and early September.
The DEA report said that easing of inter-state movement restrictions, quarantine policy and unlocking were accompanied with recovery in rail passenger earnings as well.
At the same time, the report also said that the overall credit growth continues to remain muted amid weak credit demand and heightened risk aversion among banks.
Credit to medium enterprises, however, has witnessed an uptick, according to the Monthly Economic Review for September 2020.
“Bank credit growth continued to moderate in the first six months of this year to reach 5.3 per cent as on 11th September 2020. Bank credit to the commercial sector recorded a growth of 5.4 per cent, mirroring weak credit demand and increased risk aversion in the banking system,” it said.
As per the report, while credit growth to the services sector declined from 10.1 per cent YoY in July to 8.6 per cent in August, credit to trade services picked up significantly to record 12.5 per cent YoY growth.
Growth in personal loans also moderated in August, it said.
However, credit growth to medium enterprises picked up to 2.8 per cent as on August 28 as compared to (-) 3.1 per cent as on July 31.
The report noted that the overall credit to medium enterprises and credit to micro and small enterprises under priority sector lending in August may be attributed to the Emergency Credit Line Guarantee Scheme announced in May under the Aatmanirbhar Bharat economic package of the government and the Reserve Bank of India’s (RBI) liquidity support measures.
As on September 29, the total amount sanctioned under the scheme by public sector banks (PSBs) and private banks to MSMEs and individuals stands at Rs 1.86 lakh crore, of which Rs 1.32 lakh crore has already been disbursed.
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