New Delhi: Manufacturing activity in the country does not augur well for the economic growth in March and bank credit to domestic export sector has suffered due to fall in external demand, says a report.


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The yearly SBI Composite Index for March has declined below 50 and is at 49.5, compared with last month index of 51.3. However, the monthly Index jumped to 54.5 in March 2016, from 49.1 in February 2016.


Though the index "portends" low growth, the good news is that credit off-take has increased to 11.5 percent as on March 4 compared with last year's growth of 9.8 percent on March 6, 2015.


"However, refinancing constitutes much of the credit growth, hence it may be difficult to say whether credit growth has picked up materially or in a sustained manner," Soumya Kanti Ghosh Chief Economic Adviser & GM Economic Research Department SBI said.


According to SBI Research, bank credit to domestic export sector has suffered due to fall in external demand as is visible in major export sectors like textile, gems and jewellery and this in turn has led to contraction in demand of credit.


Furthermore, instances of dumping have made revival of certain sectors difficult, depressing the demand of credit.


An index value of less than 42 is large decline, 42 to 46 means (moderate decline), 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 (high growth), it added.


SBI Composite Index rivals the existing data point from Nikkei. It has been developed on the basis of bank's internal loan portfolio, which mirrors the credit demand in the country and other data sets available in public domain.