Growth projections have been hampered by sectoral data that appear to contradict one another. Household spending is expected to rise 6.6 per cent in 2021 according to Fitch Solutions whereas credit to industry has contracted 1.7 per cent in October, according to the Reserve Bank of India.

This was largely due to contraction in credit to large industries by 2.9 per cent during the month compared with a growth of 4.2 per cent a year ago. However, credit to medium industries registered a strong growth of 16.7 per cent, up from 1.2 per cent a year ago.

In consumer spending, Fitch Solutions said it expected recovery in 2021 after a projected 12.6 per cent contraction in 2020 but will be slower than most countries.

“Unemployment will remain heightened, while the effectiveness of government support measures is questionable. As such, most indicators will only return to pre-Covid-19 levels over the second half of 2021 and 2022,” Fitch Solutions said.

However, in nominal terms, total household spending will only be 1.2 per cent higher than in 2019.

In loans, personal loans registered lower growth of 9.3 per cent in October compared with 17.2 per cent growth in October 2019. Within this sector, vehicle loans continued to perform well, showing higher growth of 8.4 per cent against a growth of 5 per cent in October 2019.

Overall, non-food credit growth decelerated to 5.6 per cent during the month compared with a growth of 8.3 per cent in the same month of the previous year.