Credit growth rate to the services sector more than halved to 13.3 per cent in August.

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 financial year, slowed to single digit at 8.8 per cent to Rs 97.71 lakh crore during the fortnight to September 27, according the Reserve Bank of India data.

In the first fortnight of the fiscal ending April 12, the credit demand grew 14.19 per cent after closing the previous fiscal at 13.24 per cent. Throughout this fiscal so far, credit growth has been in the low-double-digit.

On Thursday, global rating agency Moody's slashed its GDP growth forecast to 5.8 per cent from 6.2 per cent earlier. The downward revision came in after the first quarter GDP printed at a six-year low of 5 per cent forcing a "surprised" RBI to massively slash its forecast by a full 80 basis points to 6.1 per cent within a span of just two months and by 140 basis points from its April forecast.

Since the Q1 GDP, 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 indirect, have also been sprinting down.

While income tax collection during the first half just inched up 5 per cent against a budgeted estimate of 17.5 per cent, the all important GST collection has never touched the desired Rs 1-lakh-crore-mark barring in April.

Amidst all these negative news flows, the government has given away as much as Rs 1.45 lakh crore to the corporates by way of a massive reduction in corporate tax rates with retrospective effect from April 1, putting a big question mark on the government ability to meet the fiscal deficit target of 3.3 per cent.

Slashing the growth forecast, Moody's said the economy is experiencing a pronounced slowdown which is partly related to long-lasting factors. New IMF chief Kristalina Georgieva earlier this week opined that India is experiencing "more pronounced" effect of the global downturn.

Credit demand has slowed to single digit as the mainstay of banks-personal loans and demand from services sector lost their momentum. While credit growth rate to the services sector more than halved to 13.3 per cent in August from 26.7 per cent a year ago, personal loans growth also moderated to 15.6 per cent in August from 18.2 per cent in August 2018.

The only silver lining was demand from the industry, which more than doubled to 3.9 per cent in August from 1.9 per cent in August 2018.

In the fortnight to September 27, deposits growth too slowed to 9.38 per cent to Rs 129.06 lakh crore from Rs 118lakh crore a year ago. On annualized basis, non-food credit growth decelerated to 9.8 per cent in August 2019 from 12.4 per cent in August 2018. Loans to agriculture & allied activities increased 6.8 per cent in August compared to an increase of 6.6 per cent last year same month.