The credit growth has dropped to a 17.20 percent or Rs 4, 03,956 crore, on y-o-y basis, through 8 May, against the projected 20 percent credit growth for financial year 2009-10. During the same period, the deposits have remained flat at a 22.62 percent or Rs 7, 28,999 crore, as revealed by RBI released data.

The data also figured the total credit stood at Rs 4,21,040 crore (18.10 percent) on year-on-year basis, in the 12 months through 24 April, while total bank deposits stood at Rs 7,21,632 crore (22.54 percent) during the same period to Rs 39,23,004 crore.

A host of factors has inversely affected the credit growth. The primary reason is economic slowdown. The increased lending rates together with the fall in the stock market have discouraged corporate borrowings.

Relating the formation of new government with the country's economic performance, Tushar Poddar, chief economist, Goldman Sachs, said, "The election results, we believe, will give a fillip to sentiment and the economy which is on course for a recovery in the second half of financial 09-10. In 5 out of the past 7 elections, activity has picked up after the elections, and each time a coalition perceived to be stable has been elected. We continue to believe that domestic demand will drive growth. Consumption demand remains the mainstay of growth, driven by rural and government spending. Recent sales data on two-wheelers, telecom, and retail are all showing an uptick."