Cap­i­tal First

Business Sphere - - CONTENTS - By Our Cor­re­spon­dent

Non-food credit growth in In­dia YOY is quite low at 3.29% as of Fe­bru­ary 2017, largely led by de­growth in the in­dus­try seg­ment, mainly large cor­po­rates, which de­grew by 4.89% dur­ing the pe­riod. But a closer look at a sec­toral level shows that credit growth at MSME (in­clud­ing in­dus­try and ser­vices) and con­sumer credit have grown 8.61%. But how is it pos­si­ble that credit is stalled at the large cor­po­rate level (which we col­lo­qui­ally re­fer to as in­vest­ments), but grow­ing at the grass­roots? Af­ter all small entrepreneurs derive or­ders from the large cor­po­rates. But this logic tends to see credit growth through the prism of man­u­fac­tur­ing sec­tor alone, which rep­re­sents only 25% of GDP. The ex­pla­na­tion is that apart from a top-down trickle econ­omy, there is a bot­tom-up con­sump­tion econ­omy too. Out of 609 mi­cro in­dus­tries fi­nanced and tracked by Cap­i­tal First, only 38% are in the man­u­fac­tur­ing sec­tor. The larger en­trepreneur­ship ecosys­tem is driven to­day by con­sump­tion. Ser­vices such as sa­lons, ki­rana shops, trad­ing, chemists, eater­ies, ar­chi­tects, de­sign­ers, fuel sta­tions, garages, doc­tors, travel agents are do­ing quite well and pow­er­ing over­all credit growth. Decades of loan book built by large cor­po­rate loans are get­ting re­bal­anced to fi­nanc­ing con­sump­tion and trad­ing, which is a wel­come devel­op­ment. The other fac­tor is whether de­mand is af­fected by demonetisation. Here the data shows that eco­nomic ac­tiv­ity is back to pre-Novem­ber lev­els. En­quiries for loans are a light­ning rod for eco­nomic ac­tiv­ity. CIBIL re­ports show that re­tail loan en­quiries fell 12% in Novem­ber '16 over Sep '16, but are now higher over Septem­ber '16 by 9%. Sim­i­larly, CIBIL com­mer­cial bureau records show a dip in en­quiries of 4% in Novem­ber '16 but up 29% in Fe­bru­ary 17. The sen­si­tiv­ity to lower in­ter­est rate is higher at the bot­tom of the pyra­mid. A cor­po­rate does not choose to put up a plant be­cause in­ter­est rates are low, they would bother about larger is­sues

like pro­ject clear­ances at State and Cen­tral level. On the other hand, low rate di­rectly af­fects the monthly re­pay­ment ca­pa­bil­ity and hence, a con­sumer buy­ing a home, or a trader us­ing fi­nance as work­ing cap­i­tal is likely to avail credit if the in­ter­est rate is low enough to af­ford the EMI. The la­tent need for goods and ser­vices are huge in In­dia ow­ing to an aspir­ing class, and is hugely elas­tic to in­ter­est rates and cor­re­spond­ing af­ford­abil­ity. Seen in this light, in­ter­est rates are a cat­a­lyst to power con­sump­tion in the coun­try and di­rectly in­flu­ence the de­mand at the bot­tom of the pyra­mid for smaller entrepreneurs. Given RBI's con­cerns on in­fla­tion based on volatil­ity in global crude prices, pos­si­ble El-Nino Ef­fect, and one-off ef­fect be­cause of GST im­ple­men­ta­tion, the RBI's neu­tral stance on Mon­e­tary Pol­icy is ap­pro­pri­ate. As far as ex­cess liq­uid­ity due to demonetisation is con­cerned, the RBI may use any of liq­uid­ity tools ex­cept­ing CRR in the days to come. But sooner than later growth at the grass­roots, which is hum­ming along now, can be ac­cel­er­ated and will be­come a dis­tinct pri­or­ity. CNBC Asia’s In­dia In­no­va­tor of the Year Award The CNBC-TV18 ‘In­dia Busi­ness Leader Awards’ are con­sid­ered a bench­mark when it comes to rec­og­niz­ing the top lead­ers in In­dia’s busi­ness ecosys­tem. The awards aim at ac­knowl­edg­ing those lead­ers who have made a stel­lar dif­fer­ence in their re­spec­tive spheres, cre­at­ing that much de­sired edge above their peers. This awards prop­erty is back with its 12th edi­tion, to fe­lic­i­tate the vi­sion­ar­ies who have led In­dia's glo­ri­ous jour­ney from the front, set­ting new stan­dards in terms of growth, scale, and mar­ket lead­er­ship. CNBC-TV18 looks for­ward to salut­ing these cham­pi­ons at a gala com­mem­o­ra­tion on 23rd March 2017 in New Delhi. This year, the awards cer­e­mony will be presided over by the Hon'ble Fi­nance Min­is­ter Arun Jait­ley. Dig­ni­taries such as Chan­drababu Naidu, KT Rama Rao, and Har­sim­rat Kaur Badal will also be present to wit­ness the most cel­e­brated busi­ness awards of the coun­try. The re­cip­i­ents of the awards have been cho­sen af­ter a dili­gent process by an es­teemed jury panel chaired by Aditya Puri and aided by Cyril Shroff, San­jay Na­yar, Shikha Sharma, Vishal Sikka, Arund­hati Bhat­tacharya, Harsh Mari­wala, Kal­pana Mor­paria, and Ra­jiv Me­mani. The list of cat­e­gories and win­ners is as fol­lows: • Out­stand­ing Com­pany of the Year - Asian Paints • Most Promis­ing Com­pany of the Year - Amara Raja Bat­ter­ies • State of the Year - Andhra Pradesh • Hall of Fame - RC Bhar­gava and Dr. Bi­mal Jalan • Out­stand­ing Con­tri­bu­tion to Brand In­dia - Dipa Kar­markar • Out­stand­ing Busi­ness Leader of the Year Award - Arund­hati Bhat­tacharya • Brand of the Year - Maggi and Make Love Not Scars • Young Turk of the Year - Byju’s • Young Turk Start-up of the Year - Tonbo Imag­ing • The Dis­rup­tor- OLA cabs • CNBC Asia's In­dia In­no­va­tor Of The Year - Cap­i­tal First Limited • CNBC Asia's In­dia Tal­ent

Man­age­ment Award - RBL Bank • CNBC Asia's Cor­po­rate So­cial Re­spon­si­bil­ity Award - Mahin­dra & Mahin­dra Fi­nan­cial Ser­vices • CNBC Asia's In­dia Busi­ness Leader Of The Year - Vishal Sikka

V Vaidyanathan - CMD, Cap­i­tal First Limited

V Vaidyanathan - CMD, Cap­i­tal First Limited re­ceived CNBC Asia’s In­dia In­no­va­tor of the Year Award

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