What happened to credit growth?

Full-blown economic recovery depends on the reversal of the secular decline in credit growth

The one niggle in the otherwise unexpectedly happy story of demonetisation and its economic impact is the sharp decline in credit growth. The last data point for the year shows loan growth at a paltry 5.1 per cent, apparently a 60-year low. Credit should prima facie be an important correlate of both nominal and real growth and thus these numbers don’t quite square up with the story of an economy that seemed to have, somewhat miraculously, remained immune to notebandi.

But, first things first! Credit growth numbers since February 2016 were pulled down by the issue of UDAY bonds that, in