The Hindu Business Line : `Industrial credit demand stronger'

THE demand for credit from the commercial sector strengthened in the first quarter in 2005-06, said the Reserve Bank of India in its Macroeconomic and Monetary Developments review released on Monday.

Though food credit growth decelerated during the quarter in line with the lower procurement of foodgrain, year-on-year non-food credit growth reached 30.06 per cent on July 8 compared to 23 per cent a year ago.

The commercial sector's demand for bank credit, which had accelerated since July 2004 in tandem with a broad-based strengthening of the industrial recovery, gathered further pace in the first quarter in 2005-06.

In 2004-05, incremental credit to medium and large industries increased to Rs 42,976 crore against Rs 12,042 crore in 2003-04.

Credit to the priority sector also grew at a strong pace. Credit to agriculture accelerated by 35.2 per cent during 2004-05 to Rs 31,829 crore, from 23.2 per cent in the previous year.

There was also a sustained expansion in credit to small scale industries, which touched Rs 10,259 crore and housing which touched Rs 23,192 crore.

The sharp increase in industrial credit during 2004-05 was dominated by industries such as infrastructure, petroleum, construction, gems and jewellery, cotton, textiles, drugs and pharmaceuticals, and iron and steel, which accounted for 65 per cent of the incremental offtake during the year.

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