The pickup in India's economic growth is expected to continue, predominantly driven by manufacturing and electricity while the mining segment gathers steam, according to the State Bank of India's (SBI) composite index.
The yearly SBI Composite Index for the month of November 2015 is at at 54.5, a six-month high. The reading was 53.5 for October. Apart from this, the positive trends in the capital goods sector would also help in stimulating economic activity. The month-on-month growth in credit was at a 12-month high as of the fortnight ended October 30, 2015.
The index captures two components of the manufacturing cycle, namely, month-on-month and year-on-year growth on a scale of 0 to 100. Index above 50 implies growth over previous respective period and less than 50 suggest a contraction over a respective period.
In fact, October has seen a very healthy growth in retail loans. The rationalisation of risk weights and loan-to-value ratios will equip banks with more capital. Thus, RBI's move would release capital worth Rs 7,785 crore for the entire banking industry.
The report said industrial production was expected to see an uptick in the coming months. "As our SBI Index predicts the industrial growth 2-months in advance, our index numbers indicate acceleration in industrial production in coming months," it said.
Further, the Seventh Pay Commission was expected to have a positive impact on both the steel and cement sectors. Additionally, healthy order book if coupled with faster execution will show positive results for the capital goods and infrastructure sector.
Pointing to some more steps to give a push to the economy, the SBI report said there was an immediate need to increase import duty on long steel products. The government should also provide infrastructure status to the steel sector, it said.
The yearly SBI Composite Index for the month of November 2015 is at at 54.5, a six-month high. The reading was 53.5 for October. Apart from this, the positive trends in the capital goods sector would also help in stimulating economic activity. The month-on-month growth in credit was at a 12-month high as of the fortnight ended October 30, 2015.
The index captures two components of the manufacturing cycle, namely, month-on-month and year-on-year growth on a scale of 0 to 100. Index above 50 implies growth over previous respective period and less than 50 suggest a contraction over a respective period.
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"Our internal prognosis suggests that credit growth is likely to grow in infrastructure sectors like power and roads. We also expect a smart growth in personal loan segment especially in housing (due to rationalisation of risk weights and loan-to-value ratios)," SBI said in its economic report "Ecowrap".
In fact, October has seen a very healthy growth in retail loans. The rationalisation of risk weights and loan-to-value ratios will equip banks with more capital. Thus, RBI's move would release capital worth Rs 7,785 crore for the entire banking industry.
The report said industrial production was expected to see an uptick in the coming months. "As our SBI Index predicts the industrial growth 2-months in advance, our index numbers indicate acceleration in industrial production in coming months," it said.
Further, the Seventh Pay Commission was expected to have a positive impact on both the steel and cement sectors. Additionally, healthy order book if coupled with faster execution will show positive results for the capital goods and infrastructure sector.
Pointing to some more steps to give a push to the economy, the SBI report said there was an immediate need to increase import duty on long steel products. The government should also provide infrastructure status to the steel sector, it said.