Consistently low industry credit off-take with an annual modest growth of 0.1% is a pointer to a disconnect with GDP numbers: FIEO

New Delhi/Ludhiana, June 7, 2016: S C Ralhan, President, FIEO, while commenting on the Second Bi-monthly Monetary Policy Statement, 2016-17 stated that while there is no change in policy rates, RBI concern on implementation of Marginal rate of lending introduced on 1st April 2016 is euphemistically underlined as “work in progress” even as Industry credit off-take has touched a low of 0.1% ending 31st May 2016 with medium sector at (-)14% being the worst hit as compared to a year ago. Although priority sector lending has shown an appreciable upsurge at 11.2% from a year ago, the sectors benefited are services and agriculture, with micro & small manufacturing at a negative of 6.7%.

President FIEO stated that given the above data, there appears to be some ‘disconnect’ with GDP numbers released on 31stMay 2016 which suggest an annual GDP of 7.6% ending March 2016 (at constant prices 2011-2012) and 8.7% at current prices which needs immediate attention to ensure that policy makers could come out with measures which are consumption driven and manufacturing centric.

FIEO chief elaborated that the consistent decline in exports for the last 17 months requires a closer look at the REER data released by RBI on 20th May 2016 which suggest that even with the 36 currency basket we are overvalued by 10% and completely out of the competition if we are to compare ourselves with the big six countries.