The RBI strategy of squeezing liquidity has worked and non-food bank credit growth was down to 22% in 2007-08 as compared to over 30% a year prior. Real interest rates are up more than one percentage point and loan growth to industry is down from 28% to 25.9%, housing has halved and loans for consumer durables have fallen to a fifth. At 8.6% in February, industry recovered from January's 5.8% (10.4% and 2.3%, respectively, for capital goods) but Apr-Feb figures show a decline of around a fourth from a year ago. 46-month high inflation has spooked the RBI into hiking CRR again though most other central banks are cutting rates to ensure growth doesn't slow. Interestingly, India is relatively insulated from the global food spiral thanks to high self sufficiency. Crisil forecasts overall WPI of 5.5% for the year with a normal monsoon scenario. Exports rose 22.9% in dollar terms but just 8.9% in rupee terms. The rupee appreciation impact on export competitiveness may be overstated. In Oct-March 2006-07, long before appreciation began, textile exports fell 2.7% in rupee terms and readymade garments 6.9% "" the structural problems may be more serious.CLICK HERE FOR TABLES & CHARTS
