In FY 2010-11 the share of consumer credit in total bank credit was only 19%. By FY2023-24 this increased to around 33%. Nearly half of this credit is unsecured or quasi-secured (secured against weak collateral), which makes it riskier. In the post-pandemic period, much of the growth in bank credit has in fact been driven by growth in consumer

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Overall, these trends suggest a very significant shift in the credit landscape. Credit seems to be moving from the supply side (businesses) to the demand side (consumers) of the economy. Considering the state of economic development of India and the relatively low level of per capita GDP, this move appears to be premature. Even within consumer

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Real private final consumption expenditure has been averaging at 3.5-4 per cent over the past five years despite the exuberant leveraged spending. And while the contraction in financial savings was seen as a sign of improving household confidence, it ironically accompanied a languid actual consumption, indicating faltering real incomes.

Indeed, the

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This may have also been due to consistently weak credit demand from the industry. After years of sluggish performance, private sector investment still has not picked up in a substantial manner. It is true that within industry, bank credit to medium industry grew at almost 20% and that to small industry at around 13%, but this was primarily driven

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After the pandemic, consumers shifted spending from services to goods in 2020 due to COVID restrictions, then back to services from 2021-2024 as demand for services reemerged. This week’s chart displays real personal consumption expenditure (PCE) of goods and services, adjusting by their respective deflators for comparison. As of September 30th,

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