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17th October 2023 (8 Topics)

On the Upswing


As per International Monetary Fund’s (IMF) predictions on economic growth, India’s economic momentum in present scenario emphasizing factors like credit growth, formalization, and their impact occurs on sustained growth prospects.

Economic Momentum and Optimism

  • GDP Growth Forecasts: IMF upgraded India's 2023-24 GDP growth forecast to 3%, while RBI maintained it at 6.5%. The author's projection is even more optimistic at 6.7%, citing positive indicators.
  • Reasons for Optimism: The optimism includes favorable monsoon patterns, continued capital expenditure, robust new company registrations, and sustained credit growth.
  • Credit Growth: Credit growth, particularly among those with no prior credit history, is seen as a driver of economic momentum. The data on household debt and the formalization of the economy are reassuring.

Changing Credit Dynamics

  • Credit and GDP Relationship: The author discusses the changing dynamics of credit-to-GDP growth, emphasizing that in 2023-24, it may be around 7 times, and indicating robust fund flow to the economy.
  • The New Normal: The new normal in the banking sector, characterized by increasing credit-to-GDP ratios, is expected to drive sustained growth.
  • Outlook for Sustained Growth: The sustained healthy credit growth is anticipated to support economic momentum across the country.


  • Concerns about Credit Portfolio: The jump in the outstanding credit card and unsecured portfolios, assert that the concerns are manageable.
  • Programs for Inclusion: Government programs, like PM SVANidhi and Jan Dhan Yojana, are seen as crucial for facilitating access to credit for underserved households.
  • Key Takeaway: The evolving credit landscape in India is promoting economic growth, challenging previous credit-GDP relationships.
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