New Delhi, Jul 25 (KNN)  Contrary to the trend of a pick-up in industrial growth in May, the credit deployment to different segments of MSMEs remained sluggish and discouraging in the month as compared to April, 2014.

On a year-on-year basis, gross bank credit for micro and small Industry increased by 23.9 per cent. But in May 2014, the credit declined by 0.9 per cent from Rs 3,568 billion in April, 2014 to 3,549 billion, according to RBI data.

Meanwhile, the medium scale industries showed negative growth both in YoY as well as MoM basis. On YoY basis, the credit to the sector was –7.6 per cent, whereas on MoM basis it was at –3.2 per cent.

The Services Sector showed surge in the gross bank credit by 13.6 per cent YoY basis.  On MoM basis, the services such as tourism, hotels and restaurants; wholesale trade showed decline, whereas the services such as transport operators, retail trade, non-banking financial companies etc showed positive growth.

Priority sector lending, which also has an impressive growth of 15.3 per cent YoY basis, showed a decline of 0.7 per cent in May as compared to April this year.

Under the priority sector lending, micro and small enterprises; manufacturing as well as services showed growth of 20.9 per cent, 23.9 per cent and 18.2 per cent respectively. But out of these three, only the services sector showed a positive growth in this financial year.

MoM basis micro and small enterprises showed -2.9 per cent growth and manufacturing –7.9 per cent growth. However, Services sector showed improvement by 2.3 per cent.

Meanwhile, the industrial output, as measured by the Index of Industrial Production (IIP), rose 4.7 per cent in May from 3.4 per cent in the previous month, the sharpest increase since October 2012, according to the data released by the Central Statistics Office earlier this month. (KNN/SD)