Expand credit to boost growth

The low penetration of private credit as a percentage of India's gross domestic product suggests that all channels of credit have tremendous potential to grow

A significant portion of the Indian economy could grow a lot faster if its credit needs were better met. Estimates of unmet credit needs of creditworthy Indian companies and small entrepreneurs range from $500bn to $1tn compared to India’s current GDP of about $2.8tn and total outstanding credit of about $1.8tn from scheduled commercial banks (SCBs), corporate bonds, and HFCs/NBFCs. Closing this gap would clearly boost economic growth materially.

Private sector leverage in India (as measured by total private credit to GDP) is a fraction of that in other large economies, providing a long runway for growth in credit to support