Reserves, NRI Inflows, Rebound in Services Exports, Sectoral Credit growth and more...
This Week In Data #170
In this edition of This Week In Data, we discuss:
FX Reserves have increased in recent weeks but not as much as the NRI deposits inflows
After a weak May, Services exports rebounded growing in low teens in June
Corporate taxes saw strong growth during June quarter while Income tax collections remain weak
Credit growth is being driven by all sectors barring Personal loans where growth has seen only a modest uptick
India’s FX reserves increased by US$6bn during the week ending July 24th. And since the launch of the NRI deposit scheme, foreign currency assets have increased by ~US$13bn. As against this, the RBI has confirmed that the inflows have totalled US$40bn. There is thus a big disconnect between the two. There are 3 possible explanations.
One is that the inflow data from the RBI is till 31st July, so it is one week ahead. So, the gap could have narrowed in that week – we will know next week when the FX reserves data is published. The other explanation is that not everything that has been raised has been repatriated back to India. And the third explanation is that these inflows have been offset by commensurate outflows and there have not been surplus inflows for the RBI to mop up. The second and third we will only know a few months down the line when the balance of payments data is released. Till then, we can only speculate.
After a weak May, services exports recovered in June, growing 13.3% YoY, the highest growth this year and the second highest growth since April last year. There is thus, as yet, no discernible impact on services exports of the whole AI disruption. And this is data in USD terms; the growth would be much stronger in INR terms given the double-digit depreciation in the rupee.
That said, services imports, however, rose faster than exports for the second consecutive month. Imports grew by 16% YoY in June, only the second time they have grown in double digits since the start of last year. Trade surplus accordingly grew at a modest 10% YoY. The blip in May has meant that for the quarter, services trade surplus has seen a modest 9% growth on a YoY basis.
June was another strong month for corporate tax collections. In aggregate, they grew in the high teens, taking the growth for the June quarter to almost 20% YoY. This is further validation that corporate profitability growth remains fairly strong.
In contrast, the personal income tax collections continue to see muted growth. In June, they saw mid-single-digit growth, taking the growth for the entire quarter to a modest 7% YoY. Unlike corporate taxes, where growth has seen variability, income tax collections have seen muted growth for the past few quarters. The highest growth in recent quarters was 10% YoY during the September quarter last year, while the lowest was -10% in the March quarter this year.
Lastly, we have discussed how credit growth has accelerated in the last few months. Overall non-food credit growth has doubled over the past year – from 9% in June 2025 to 18% in June this year. And every sector, except personal loans, has contributed to this uptick, with Industry seeing the biggest uptick. Growth in credit to the Industry has grown from 6% to 19% over the past year, with the petroleum sector seeing the sharpest increase in credit growth. The services sector has seen credit growth increase from 9% to 21%, while the agriculture sector has seen credit growth increase from 9% to 18%.
In contrast, personal loans have seen a modest increase in growth - from 12% to 16% during this period. Indeed, as of June, personal loans were the slowest growing segment of bank credit. Mortgages or home loans, the biggest chunk of personal loans, have seen growth remain largely stable at 11% YoY as against 10% YoY a year back. Vehicle loans are the standout though with credit growth having accelerated sharply.
That’s it for this week. See you next week…