Industrial Credit Growth Signals Revival In Private Investment: Kotak Report
India’s economy continues to demonstrate resilience despite an uncertain global environment, with high-frequency indicators pointing to steady growth across manufacturing, construction, services and consumption, according to a report by Kotak Institutional Equities.
The report highlights a sharp rise in industrial credit as one of the strongest signs of a recovery in private sector investment. Credit to industries grew 18 percent year-on-year in May 2026, reflecting improving business confidence and increased capital expenditure across key sectors.
According to the report, credit growth remained robust in industries such as engineering, iron and steel, chemicals and infrastructure, indicating broad-based investment activity. The brokerage expects this momentum to continue as companies expand capacities and invest in value-added manufacturing segments, particularly in chemicals, electricity and electronics, supported by favourable government policies.
Kotak noted that most high-frequency indicators suggest a stable to improving growth outlook, despite global uncertainties. Manufacturing activity, construction, services, consumption trends and labour market indicators have largely remained resilient, underscoring the strength of domestic demand and economic fundamentals.
However, the report cautioned that external developments continue to pose risks to the outlook. The renewed Iran-US tensions have pushed crude oil prices higher, while deficient monsoon rainfall has raised concerns over food inflation.
These factors could create near-term pressure on inflation and overall macroeconomic stability if they persist. Nevertheless, Kotak believes the current risks remain manageable and expects economic and political considerations to prevent a prolonged escalation of geopolitical tensions.
While acknowledging the uncertainty surrounding global developments, the brokerage maintains that India’s growth trajectory remains intact, supported by rising private investment, strong credit expansion and continued policy support for manufacturing and infrastructure development.
The report suggests that sustained investment in value-added industries and improving industrial activity could provide a strong foundation for economic growth in the coming quarters, even as policymakers and businesses closely monitor geopolitical and weather-related risks.
