Economy sitting pretty, conditions to improve

The improving liquidity position of banks is expected to help meet industry demands, achieving a growth rate of 7-8 per cent despite the current global environment.
Economy sitting pretty, conditions to improve

NEW DELHI: The Indian economy seems set to power ahead, with the situation in the current quarter turning positive compared to the previous 48 quarters. According to the Confederation of Indian Industry (CII)-Indian Banks Association (IBA)’s Financial Condition Index, the improving liquidity position of banks is expected to help meet industry demands, achieving a growth rate of 7-8 per cent despite the current global environment.

The survey, conducted for the first quarter of financial year 2017-18, points out that the expectation of banks and financial institutions have both improved, brushing up the Economic Activity Index. The Funding Liquidity and External Financial Linkages Indices have also improved. “… on the back of increase in consumption, infrastructure spending… We are confident the Government and RBI would continue to focus on the objectives of maintaining financial stability and sustaining steady economic growth,” Chandrajit Banerjee, Director General, CII said.

Rajeev Rishi, Chairman, IBA and CMD, Central Bank of India added that with the funding liquidity index  showing “the maximum upward movement” the liquidity position would be comfortable.
“Banks are in a position to meet credit demands of the productive and needy sectors,” he asserted.
The Index reflects the short term financial condition of the Indian economy,  providing early signals on turning points in financial conditions and tracking credit flow conditions for industry and service sectors.

The survey has thrown up some important indicators — a spurt in demand in household spending by the growing middle class, rising disposable incomes and rebounding private sector investment after implementation of key reforms like GST. Other positives are equity markets ruling at all-time highs and the accommodative stance of the RBI in keeping a close vigil on interest rates.

Going forward, the respondents expect a sustained improvement in real GDP growth, non-food bank credit and asset prices (Stock & Housing market) in the current quarter compared to the previous quarter.

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