Tuesday, July 9, 2013

Credit conundrum

Recent sectoral credit and weighted average lending rate data published by RBI raises some pertinent questions:

(a)   The share of industry in GDP over past two decades is unchanged, but the share of industry in bank credit has fallen by 25% despite rate for industry falling the most. Does this explains supply side constraints of the economy?

(b)   The share of agriculture in GDP has fallen by 50% over past two decades. But the share of credit to agriculture sector has fallen by just 12%. Does this explain higher capital intensity of agriculture or populism, as there has been little improvement in productivity.


(c)   Share of personal loans has more than doubled over past two decades, though housing loan rates in 2012 were 40% higher as compared to 1992. Does this imply speedier urbanization or unsustainable bubble in housing sector?


Thought for the day

“Confusion is a word we have invented for an order which is not understood.”
-          Henry Miller (1891-1980)

Word of the day

Yawp (v):
To utter a loud, harsh cry; to yelp, squawk, or bawl.

(Source: Dictionary.com)

Shri Nārada Uvāca

PM to meet India Inc on 29 July to discuss:
1.       Measures to correct CAD.
2.       Measures to revive industrial growth.
3.       INR Depreciation and its impact on trade and industry
4.       Skill development and ways of accelerating it.
5.       Development of industrial corridors.
…………….???

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