Loan fairs

in the coming months. The banks’ outreach focused on loans to new customers, particularly homebuyers and other retail consumers, farmers, and micro, small and medium enterprises (MSMES).

The loan disbursal camps or loan melas were held in two rounds – the first round covered 226 districts and the remaining districts were covered in the second round. India has 718 districts.

The loan melas are among the measures announced by the government to combat the slowdown. The Indian economy grew by 5% in the three months ended June, the slowest rate of growth in 25 quarters. In recent weeks many financial institutions and agencies have revised downward their estimates of growth for 2019-20. For instance, Moody’s Investors Service cut India’s economic growth forecast for the current year to 5.6% from 5.8% and State Bank of India pared its projection to 5% from 6.2%.

Experts said the loan melas could provide a temporary fillip to the economy.

“These loan melas coincided with the festive season and would have led to a spurt in consumption demand amounting to about 1% of GDP. This will broadly reflect in consumer demand for non-durables,” said DK Srivastava, chief policy adviser, EY India. “Some improvement in growth is expected in the third quarter of FY20. But, the overall effect is likely to be seasonal in nature and may ebb out after November 2019.”

Ranen Banerjee, leader - Public Finance and Economics, PWC India, said, “The initiative has been a good move towards stimulating consumption. However, we will have to wait to see the uptake given the higher household indebtedness and weak sentiments as per RBI [Reserve Bank of India] survey on household perceptions.”

The government’s hope is that the channelling of credit to retail borrowers will boost demand and to enterprises, spur economic