“India’s double-digit growth target for FY22 is very ambitious”


New Delhi: The Indian economy, which is looking to record strong double-digit growth in FY22 to quickly recover from the current slowdown induced by Covid-19, may have set itself an ambitious target that would be difficult to achieve given continued weak debt growth indicating that the recovery in economic activity remains moderate.

According to a brokerage report, debt growth in the non-financial non-government sector (NGNF), i.e. the household and corporate sectors, remains subdued, indicating weaker economic activity. NGNF debt only grew 5.0% year-on-year in 3QFY21 – barely better than the record low growth of 4.6% in 2QFY21.

Within the NGNF sector, household debt increased to a decent level of 9.6% year-on-year in 3QFY21 (v / s 8.7% in the previous quarter), but non-financial corporate (NFC) debt n ‘grew only 2.0% year-on-year, similar to 2QFY21 levels as companies. remained skeptical of the overall economic situation and reiterated the idea of ​​making more investments at this stage.

“Such weak debt growth confirms that the recovery in economic activity remains subdued. Coupled with our argument that COVID-19 could have a negative impact on Indian household incomes, this implies that a strong recovery looks very strong. ambitious, ”said Motilal Oswal Financial Services in its EcoScope report.

During the pandemic period, it was the government that borrowed the maximum to stimulate the economy in the absence of private investment by companies. So, compared to India’s growth in non-financial sector (NFC) debt of 10.3% yoy in 3QFY21 (the highest growth in six quarters), it is general government debt ( center + states) which rose to a record 16.3% yoy not the household and business sector.

So while India’s NFS debt stood at Rs 338 lakh crore in 3QFY21, compared to Rs 314 lakh crore in 4QFY20 and Rs 330 lakh crore in 2QFY21, the 85 percent increase in NFS debt in FY21 is attributable to the government sector as a business the sector has experienced only marginal growth and households have experienced decent but slower growth in their outstanding debt.


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