India's Economy Shows Broad-Based Recovery As Industrial Credit Surges 18%: Kotak

New Delhi, Jul 30 (KNN) The Indian economy has remained resilient despite an uncertain global macroeconomic environment, with high-frequency indicators pointing to broad-based improvement across sectors and a sharp rise in industrial credit indicating a revival in private sector investment, according to a Kotak Institutional Equities report.

The report said manufacturing, construction, services, consumption and labour market indicators have largely remained steady or improved despite geopolitical tensions in West Asia and weather-related risks.

Industrial Credit Signals Revival in Private Investment

A key indicator of the recovery has been the rise in credit to industry, which suggests strengthening private sector investment activity. Industrial credit grew 18 percent  year-on-year in May 2026, with credit growth remaining strong across sectors including engineering, iron and steel, chemicals and infrastructure.

Kotak Institutional Equities expects the investment momentum to continue as companies increase spending on value-added manufacturing, particularly across chemicals, electricity and electronics value chains, supported by government policies.

The report said improving credit growth and capital expenditure indicate strengthening business confidence and a broad-based revival in private investment, reported ANI.

Geopolitical and Monsoon Risks Pose Challenges

However, the brokerage cautioned that external risks have increased. The re-escalation of the Iran-US conflict and resulting rise in crude oil prices, along with deficient monsoon rainfall, could add pressure on inflation, particularly food inflation.

India's Macroeconomic Outlook Remains Manageable

Despite these risks, Kotak said India's macroeconomic outlook remains manageable for now, although a prolonged geopolitical conflict could worsen the outlook.

The brokerage also expects economic and political considerations to limit the possibility of a prolonged conflict between Iran and the US, while a de-escalation could further improve India's macroeconomic prospects.

(KNN Bureau)