Speedy Recovery of the Economic Activity has Enhanced the Credit Growth

Key economic indicators including consumption, investment, and external demand are regaining traction.

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SPEEDY RECOVERY OF THE ECONOMIC ACTIVITY HAS ENHANCED THE CREDIT GROWTH

New Delhi, September 6, 2021: High growth of non-food credit to 6.6% y-o-y is inspiring. The fact is that the demand has re-emerged and economic activity is gradually reaching pre-pandemic levels. The improvement in key economic indicators is signaling a recovery in the coming months which will be higher than the pre-COVID economic activity. The overall economic outlook is improving. Domestic economic activity has started normalizing with the decelerating cases of the second wave of the virus and the phased reopening of the economy, said Mr. Sanjay Aggarwal, President, PHDCCI

Key economic indicators including consumption, investment, and external demand are regaining traction. Further increasing coverage of vaccinations is likely to boost spending on goods and services including travel, tourism, and recreational activities, leading to recovery in demand. Urban demand is likely to accelerate with the onset of the festive season.

This is further supported by encouraging movements in several high-frequency indicators, such as increased sales of passenger vehicles on a y-o-y basis, increased power consumption, increased consumer durable sales, and hiring of urban workers. At this juncture, there is a need to further fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on the expansion of capital investments in the country.

More and more direct benefit transfers need to be considered for the urban and rural poor under the various welfare schemes in addition to the free distribution of dry rations till Diwali as already announced by the Hon’ble Prime Minister. Gradually rising capacity utilization, rising steel consumption, higher imports of capital goods, and the economic packages announced by the Government are expected to kick-start a revival.

The innovative working models adopted during the pandemic by businesses and corporates will reap efficiency and productivity gains. This is expected to trigger a virtuous cycle of investment, employment, and growth.

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Speedy Recovery of the Economic Activity has Enhanced the Credit Growth
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Key economic indicators including consumption, investment, and external demand are regaining traction.
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THE POLICY TIMES
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