Dec. 15: Dalal Street may be fretting, but the main street seems to be doing just fine. Three different indicators — loan growth, advance tax and indirect taxes — which were announced on Wednesday, all show that India is doing quite well.
In the run-up to the credit policy on Thursday, RBI announced that the total loans given by Indian banks in the past one year increased by 23 per cent — higher than its estimate of 20 per cent. Incidentally, with wholesale price inflation coming down for the month of November, most bankers don’t expect the RBI to tinker with any of its policy rates. Meanwhile, the past few days have seen several leading banks raise deposit and borrowing rates.
Meanwhile, a number of companies also announced their advance tax figures, substantially better than last year’s figures. Biggies such as Reliance, Tata Steel and M&M have paid substantially higher amounts as advance tax this year compared to FY10. Banks too, have paid higher advance tax compared to the last year.
On the whole, advance tax payments for the October-December period are higher by 17.5 per cent for the top 100 companies. Looking ahead, the picture seems positive too. Brokerage house Motilal Oswal says that India Inc. is likely to see a 24 per cent compounded growth in profits through FY12.
Meanwhile, indirect tax collection has also improved. The government has collected `2.07 lakh crore rupees as indirect taxes from April-November this year — a jump of over 40 per cent compared to the last year. The total collected so far is about two-thirds of the target for the full year.
“These numbers indicate a decent performance by the Indian economy,” says an economist working with a leading foreign bank. “Overheating of the economy also doesn’t seem to be a concern at this point,” he adds. While these numbers are positive, there could be some rough patches ahead.
The strong credit growth from the banking sector is unlikely to hold for FY11, he says. However, the 8.5-9 per cent growth target is unlikely to be affected.