On the flip side, credit flow to the industrial sector witnessed a lower growth during the first eight months of 2013, at 6.4%, compared to 7.7% during the year-ago period, a report by credit rating agency CARE Ratings pointed out.
During the period under consideration, loans to the agri sector grew 5.2% compared to 2.3% a year earlier. "Higher growth in credit to agriculture may be attributed to the expected better kharif crop which has been announced by the Ministry of Agriculture," the report said.
In comparison, the lower pace of credit growth in the industrial sector "can be linked to the overall state of industry where growth in manufacturing in particular for the first seven months of the year was lower at -0.3% as against +1.1% during the same period of last year." The report also pointed out that the lower growth to industry, while linked to overall state of the industry in India, shows a differential picture across sectors.
"The SME segment has witnessed higher levels of borrowing while that to the large firms has slowed down. The latter could be due to the fact that larger firms have access to ECBs and have looked more closely at this route given the interest rate differential," the report pointed out. However, given that the rupee was volatile, the relative attractiveness of such loans could have come down, the report noted.
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