However, credit growth is always negative during the first quarter of the year, and in 1997-98 overall credit growth was negative to the tune of Rs 2,732 crore by June 19 last year. Credit picks up with the onset of the busy season. What is interesting about the figure for credit growth is not that it is negative, but the extent to which credit growth has reduced. Compared to Rs 9,400 crore negative growth in non-food credit during the current year till June 19, the comparable figure for 1997-98 was a negative growth of Rs 5,200 crore, for 1996-97 Rs 5,100 crore and for 1995-96 Rs 4,870 crore.

Clearly, the reduction in non-food credit offtake has been more severe this year. The year-on-year figures show that non-foodcredit is up by 13.8 per cent as on June 19, a slowdown from rates of year-on-year growth reached earlier during the year. The data must be viewed against the backdrop of an expected increase in domestic funding due to the drying up of external resources. The data proves that the problem with the economy is lack of demand, and there is no shortage of monetary resources. Further, lack of finance is not a problem for infrastructure projects, a fact corroborated by the very low rates on long bonds. All this points to the urgent need by the government to increase spending, if not through budgetary resources, then through the public sector enterprises.