Slowdown blues: Low demand in economy shrinks loan book of India Inc

Outstanding loans to commercial sector fell Rs 65K cr; in H1FY19, it grew Rs 1.73 trn

Lack of aggregate demand in the economy has begun to weigh on fresh borrowings by the corporate sector as well as smaller businesses. According to the latest monetary policy review, flow of resources to the commercial territory was negative in the first half (April-September or H1) of 2019-20 (FY20).

This is the first time in several years that companies and businesses are repaying debt and deleveraging their balance sheets at the aggregate level rather than expand borrowings to make fresh investments. In H1FY20, outstanding loans to the commercial sector was down Rs 65,000 crore, over the same period last year.