State Bank of India Chairman Rajnish Kumar has said the next two months will be crucial for the Indian economy. He also rejected concerns around credit squeeze after the merger of 10 public sector banks and said the crucial task was to protect customers coming into the anchor banks. With concerns around 25-quarter low GDP numbers high, and many sectors including auto and FMCG going through churning, the SBI Chairman said October and November months would determine if the current slowdown was "cyclical or structural", reported the Economic Times. He added there were issues around the environment, change in mindset, and that all these factors had come at the same time.
On concerns around credit squeeze after the merger of 10 public sector banks, Kumar said the suggestions to merge PSBs were given 25 years ago and that credit slowdown could be taken care of if there is a strong execution team. "The biggest issue is IT, human resource and customer integration; we need to protect customers coming into the anchor banks," Kumar told the daily.
The National Statistical Office (NSO) last week released the gross domestic product numbers for April-June quarter, which showed India's GDP growth slipped to a 6-year low of 5 per cent as compared to 5.8 per cent in the previous quarter.
Comparatively, China, which is a much larger economy than India, had recorded a GDP growth of 6.2 per cent during the April-June period, slightly lower than 6.4 per cent record in the previous quarter. With the subsequent decline in GDP growth, India has fallen further behind its neighbour in terms of economic growth.
India had already lost its title of the world's fastest-growing economy to China in the previous quarter when its economic growth slowed to 5.8 per cent compared to Beijing's growth of 6.4 per cent.
The auto sector is bleeding. Major automotive companies such as Maruti Suzuki India, Hyundai, Mahindra and Mahindra, Honda and Tata Motors reported a double-digit de-growth in August sales.
Edited by Manoj Sharma