Even as credit growth still remains in comfort territory, despite slowing down, the report said there is more concern over the slowdown in growth.
Credit growth to Micro & Small Enterprises (MSEs) has been quite stupendous after the implementation of GST. Incremental credit to this segment (under priority sector) in the 15-month period post-GST increased 5 times to ?1.23 lakh crore, compared to ?25,700 crore during the corresponding pre-GST period, according to a State Bank of India research report.
The jump in credit to MSE sector bodes well regarding the formalisation of the Indian economy and, hence, the ensuing benefits, said the bank’s Ecowrap report.
Economic activity
The report observed that the deceleration in credit during the pre-GST period was partly due to the overall slowdown in economic activity, rising NPAs (non-performing assets), and reclassification of food and agro-processing units from the MSME (micro, small and medium enterprise) category to agriculture sector (as per the revised priority sector lending guidelines, 2015).
“According to International Finance Corporation (IFC) estimates, the potential demand for India’s MSME finance is about $370 billion, against the current credit supply of $139 billion, resulting in a finance gap of $230 billion. Hence, much needs to be done,” the report said.
Even as credit growth still remains in comfort territory, despite slowing down, the report said there is more concern over the slowdown in growth.
The report has cut its FY19 GDP forecast for FY19 to 7.2 per cent from 7.4 per cent earlier.

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