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Rajalakshmi Menon

MUMBAI, June 19

IS the economy at long last crawling out of a four-year-old depression? None is sure least of all bankers though some admit to a crisp pick-up in non-food credit in the first two months of the current financial year.

Blessed with long memories, some bankers recall a similar trend in December 2001 lasting till February 2002 when the Budget and the Gujarat riots stalled the movement. They now prefer to state the facts and reserve comments.

As per the latest figures available, the "actual" growth in non-food credit has been of around Rs 14,000 crore for the two months ended May 31, 2002 against a negative growth of Rs 4,500 crore in the corresponding period of the previous year.

During the two-month period, total outstanding as on May 31, 2002 was around Rs 5,83,000 crore, while outstanding as on May 31, 2001 was around Rs 4,67,000 crore. Total non-food credit in the first two months of the current fiscal has registered a growth of around Rs 51,500 crore against a growth of Rs 60,000 crore registered for the whole of 2001-02. For the past two years, 2000-01 and 2001-02, credit growth has been steady at around Rs 60,000 crore per annum.

At a recent meeting of bankers and RBI officials, it was estimated that around Rs 37,000 crore of this Rs 51,500 crore was on account of the merger between ICICI and ICICI Bank.

Bankers said with the huge ICICI credit portfolio flowing into the bank credit domain, non-food credit had registered a sharp rise. "The ICICI figures have distorted the bank credit figures. This distortion is expected to be sorted out shortly. Credit growth, nevertheless, in the fiscal has shown a marked improvement," said one banker.

According to bank officials, sectors such as petroleum, infrastructure, retail and cement have shown some activity. Bankers expect total credit growth in the current year at 14-16 per cent against 11.5 per cent in the previous year and the message has been relayed to the RBI.

Said a senior banker, "The previous year was a particularly severe one but there has been some uptrend witnessed in credit for the past six months. The recent figures for the period of April and May 2002, which is traditionally dubbed the slack season, provide sufficient cause for some to lose their stiffness".

The index of industrial production (IIP) for March and April 2002 had indicated an annual growth rate of around three per cent against around 2.5 per cent in the corresponding period in the previous year.

For the next three months ending July 2002, the Institute of Economic Growth has estimated a three per cent growth in IIP.

GDP figures for the quarter of September 2001 to December 2001 had increased to 5.8 per cent (3.9 per cent).

The outlook of NCAER too is positive indicating that outlook for the economy is definitely improving, bankers said.

Exports too have picked up, registering a growth of 18.6 per cent as at April-end 2002 over the previous year.

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