Business Standard / New Delhi Aug 03, 2009, 00:20 IST
the imf has raised its forecast a tad but uncertainties remain. US data is encouraging and Q2 growth fell just 1% as compared to 6.4% in Q1 with both housing and investment contracting less. Rising public debt ensures spreads remain well above pre-crisis levels and lending to companies is far from taking off. The Euro Area will remain troubled while the US bounces back next year. In India, corporate sector results remain weak but July saw a big revival in terms of the money firms raised — around $4.5 bn was raised both in India and abroad.
The Budget is a key area of concern with government planning to borrow Rs 400,000 crore in the rest of the year. In the last two years, around half of India Inc’s needs for finance were met by banks within the country — in Q1 2009-10, this fell to a third of that in Q1 2008-09. Credit growth in June rose 15.4% as compared to 24.5% a year ago and real interest rates are at an all-time high — the revival of global credit markets is critical. There are several green shoots — cement grew through all of 2008-09 and, in volume terms, steel has also done well. Over a fourth of the respondents in RBI’s expectations survey feel things will be better compared to 11% in the last round — a year ago, it was over 40%. GDP growth this year could be a bit lower than in 2008-09.
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