1st time in FY20, credit expands in single digit
Mumbai: Reflecting the deepening economic crisis arising from both structural and cyclical issues and a massive fall in consumption demand, bank credit growth rate, for the first time this fiscal, slowed to single digit at 8.8% to Rs 97.71 lakh crore during the fortnight to September 27, according to RBI data.
In the first fortnight of the fiscal ending April 12, the credit demand grew 14.2% after closing the previous fiscal at 13.2%. Throughout this fiscal so far, credit growth has been in the low double-digits. On Thursday, global rating agency Moody’s slashed its GDP growth forecast to 5.8% from 6.2% earlier.
The downward revision came in after the first-quarter GDP printed at a six-year low of 5%, forcing a “surprised” RBI to massively slash its forecast by a full 80 basis points (100bps = 1 percentage point) to 6.1% within a span of just two months and by 140bps from its April forecast.
Since the Q1GDP, there has not been any positive data coming out, barring inflation, which remains tamed. Be it IIP numbers or exports or core sector data, everything has been heading south month after month.
On top of it, tax collections, both direct and direct, have also been sprinting down. While income tax collection during the first half just inched up 5% against a budgeted estimate of 17.5%, the all important GST collection has never touched the desired Rs 1 lakh-crore-mark barring in April.
In the quarter, Infosys’ revenue grew 11.4% on a constant currency basis compared to last year. Constant currency discounts the impact of crosscurrency fluctuations. In comparison, TCS grew at 8.4%, after four quarters of double-digit growth. In reported terms, Infosys’ revenue was up 9.9%, higher than TCS’ 5.8%.
“In financial services, we have had a decent run with a few quarters of double-digit year-on-year growth,” CEO Salil Parekh said. BFSI growth rate was 10.3%, compared to TCS’ flat growth. The numbers helped the company raise the lower range of its revenue guidance for the year to 9% from 8.5%, though it kept the upper range intact at 10%.
“There is some weakness in capital markets and we see
The retail vertical continued to be a pain point, growing just 1.1%. “Retail is closely linked to consumer sentiment. The spends in retail have come down and, in the last quarter and this, we have seen some softness and slowdown,” chief operating officer Pravin Rao said.
Infosys is transferring the business of its wholly owned subsidiary Skava (Kallidus and Skava are together referred to as Skava) to itself, subject to regulatory approvals for a consideration based on an independent valuation. Infosys’ margins went up 1.2% to 21.7% compared to the preceding quarter, which it attributed to higher utilisation of employees and greater offshoring of work to India.