India's Economic Soar: Record Credit Card Spends Signal Resilience Amid Global Challenges
In October 2023, credit card spends in India surged to an unprecedented high of Rs 1.8 trillion, marking a substantial 38.3% year-on-year growth, driven notably by robust festival season expenditures. The month-on-month increase of 25.4% was the highest in two years. Concurrently, the spend per card reached a record Rs 18,898, reflecting a nearly 16% year-on-year rise in October-November. The surge was attributed to significant online transactions, witnessing a 39% year-on-year growth in volume and a 55.1% year-on-year increase in value. Notably, online credit card spends constitute around 65% of the total, with larger ticket sizes contributing to the upswing.
HDFC Bank experienced a 20.3% year-on-year increase in credit card spends, while SBI Card saw a surge of nearly 52% year-on-year to Rs 35,459 crore. Axis Bank emerged as the leader with a remarkable 92% year-on-year growth in credit card spends, reaching Rs 21,767 crore in October. The burgeoning credit card spends underscore the resilience and vibrancy of India”s economic landscape, bolstered by robust service activity and sustained urban demand despite global economic challenges.
India”s economic expansion has remained robust, with GDP growth projected to have moderated to 6.8% in the July-September quarter from the previous quarter”s 7.8%. Capital expenditure during the first six months of the fiscal year stood at 4.91 trillion Indian rupees ($58.98 billion), a notable increase from the previous year”s 3.43 trillion rupees during the same period. The country”s economic resilience is attributed to strong service activity and steady urban demand, counteracting the impact of a global economic slowdown.
Despite challenges such as geopolitical uncertainties and market fluctuations, policymakers have implemented strategies to mitigate spillovers. The Reserve Bank of India has utilised foreign exchange reserves to stabilise the rupee, and retail fuel prices have remained unchanged. While external pressures may impact growth, inflation, and fiscal situations, policymakers aim to maintain financial stability while managing the price stability-growth mandate. Sustained equity market weakness and tight banking liquidity could pose challenges to the private capex cycle, impacting overall GDP growth in 2024-25.
India”s economic trajectory is set for for significant growth, with projections indicating it will surpass Japan and become the world”s third-largest global economy by 2030. The country”s GDP is expected to exceed $7.3 trillion, showcasing a robust growth outlook and positioning India as the fastest-growing major economy, with a growth rate exceeding 6% in 2023-24. The favorable demographics, a large working-age population, and rising urban incomes contribute to a long-term growth advantage.
The ongoing digital transformation, with 1.1 billion Indians projected to access the internet by 2030, enhances opportunities across sectors. Substantial foreign direct investment (FDI) inflows, particularly in technology and manufacturing, validate India”s attractiveness as an investment destination. Having already surpassed the UK and France, India is on track to overtake Germany, solidifying its position as an economic powerhouse. This upward trajectory underscores India”s economic resilience, demographic dividend, and potential to become a key global economic and strategic force.
