Indian Economy: News and Discussion

[Cutting Edge 2]

Modi pushes for Asia-Africa growth corridor with Japan
IANS | Gandhinagar May 23, 2017 Last Updated at 19:52 IST

Prime Minister Narendra Modi on Tuesday pushed for an Asia-Africa Growth Corridor which involves India and Japan and said research institutions of the two countries have come up with a vision document to explore joint initiatives in skills, health, infrastructure, manufacturing and connectivity in Africa.

Modi, who inaugurated the 52nd Annual Meetings of the African Development bank (AfDB) at Mahatma Mandir here, said India was working with the United States and Japan to support development in Africa.

Modi's remarks came days after China unveiled its One Belt One Road (OBOR) initiative that seeks to connect China with major markets, including those in Africa, Europe and Central Asia. India has not joined OBOR.

Modi recalled his conversation with Japanese Prime Minister Shinzo Abe during his visit to Tokyo last year and said they discussed commitment for enhancing growth prospects.

"In our joint declaration, we mentioned an Asia Africa Growth Corridor and proposed further conversations with our brothers and sisters from Africa," he said.

Modi said Indian and Japanese research institutions have come up with a vision document in consultation with think tanks from Africa.

"I understand the vision document would be presented at the board meeting later. The idea is that India and Japan, with other willing partners, would explore joint initiatives in skills, health, infrastructure, manufacturing and connectivity," he said.

The five-day AfDB meeting will witness a special Session on India-Japan cooperation for development of Africa.

Japan External Trade Organization (JETRO), Japan International Cooperation Agency (JICA) and Japan Bank for International Co-operation (JBIC), in cooperation with their partner organizations in India and Africa will discuss ways to promote African business through private-public partnerships between Japan and India, in order to contribute to the development of the African economy, at the special session.

During his visit to Japan last year, Modi and Abe had stressed on improving connectivity between Asia and Africa, through realising a free and open Indo-Pacific region, stating that it is vital to achieving prosperity of the entire region.

They had also underscored the importance of India-Japan dialogue to promote cooperation and collaboration in Africa, with the objective to synergise their efforts and explore specific joint projects, including in the areas of training and capacity building, health, infrastructure and connectivity.

They expressed their intention to work jointly and cooperatively with the international community to promote the development of industrial corridors and industrial network in Asia and Africa.

http://www.business-standard.com/ar...rowth-corridor-with-japan-117052301397_1.html

 

[sthf]

India set to beat Japan, turn 2nd-largest steel maker

http://www.financialexpress.com/mar...at-japan-turn-2nd-largest-steel-maker/684351/

 

[Akshay_Fenix]

India's Forex Reserves Surge by $4 Billion is at $379.310 billion: RBI Data

https://www.rbi.org.in/Scripts/BS_ViewWssExtractdetails.aspx?id=40571

 

[Mikesingh]

India's Forex Reserves Surge by $4 Billion is at $379.310 billion: RBI Data

https://www.rbi.org.in/Scripts/BS_ViewWssExtractdetails.aspx?id=40571

What a contrast from 1991 when the foreign exchange reserves, meant to cover import costs for two years (1989-1991), were just sufficient to cover close to two and half months of imports and stood at a paltry $1.2 billion!!!

And now Forex Reserves at almost $380 billion that's pretty incredible!!

 

[IndianHawk]

What a contrast from 1991 when the foreign exchange reserves, meant to cover import costs for two years (1989-1991), were just sufficient to cover close to two and half months of imports and stood at a paltry $1.2 billion!!!

And now Forex Reserves at almost $380 billion that's pretty incredible!!

Lower oil prices have helped us a lot. Saved lots of forex for India. And now a surging rupee is buying more for less.

I just wish shale revolution spreads further thus taking oil to 25$ levels that will be huge boost to India's growth for next decade.

 

[Akshay_Fenix]

India GDP Growth Unexpectedly Slows To 6.1% In Q1 17

The Indian economy advanced 6.1 percent year-on-year in the first quarter of 2017, slowing sharply from a 7 percent expansion in the previous period and well below market expectations of 7.1 percent. It is the lowest growth rate since the last quarter of 2014, due to a slowdown in consumer spending and a drop in investment, following the demonetization program started in November of 2016 that removed 86 percent of India's currency in circulation. In addition, the government changed the GDP base year for 2011-2012 from 2004-2005. The same change was made earlier for industrial production and wholesale prices indexes, with adjustments in the weights of the different industries. Considering the April 2016-March 2017 period, the economy advanced 7.1 percent, in line with the official estimate but below 8 percent in the previous year.

Year-on-year, private spending rose 7.3 percent, slowing from an 11.1 percent gain in Q4 2016 and gross fixed capital formation shrank 2 percent, following a 1.6 percent gain in Q4. In addition, exports (10.3 percent compared to 4 percent in Q4) rose less than imports (11.9 percent compared to 2.1 percent in Q4). In contrast, government expenditure jumped 31.9 percent, higher than 20.9 percent in Q4.

GDP estimates for Q1 already include revised data for industrial production and wholesale prices. The government changed the base year for those indicators earlier in May, aiming to align them and make them more representative. Manufacturing has now a higher weight in the industrial production index (77.6 percent form 75.5 percent) while electricity production accounts for less (8 percent from 10.3 percent).

The Gross Value Added, that is, GDP excluding taxes, increased 5.6 percent year-on-year in Q1 of 2017, lower than 6.7 percent in Q4 2016. Construction shrank 3.7 percent (+3.4 percent in Q4 2016) and slowdowns were recorded for trade, hotels, transport and communication (6.5 percent from 8.3 percent); financial and real estate activities (2.2 percent from 3.3 percent); manufacturing (5.3 percent from 8.2 percent); agriculture (5.2 percent from 6.9 percent) and utilities (6.1 percent from 7.4 percent). In contrast, mining and quarrying (6.4 percent from 1.9 percent) and public administration and defence (17 percent from 10.3 percent) rose faster.

https://tradingeconomics.com/india/gdp-growth-annual
https://tradingeconomics.com/india/gdp-growth-annual
Guess the GDP figures aren't fake (made up by Modi) anymore, jokes aside. Two more quarters of low growth to go and then GST kicks in.

 

[ezsasa]

India GDP Growth Unexpectedly Slows To 6.1% In Q1 17

The Indian economy advanced 6.1 percent year-on-year in the first quarter of 2017, slowing sharply from a 7 percent expansion in the previous period and well below market expectations of 7.1 percent. It is the lowest growth rate since the last quarter of 2014, due to a slowdown in consumer spending and a drop in investment, following the demonetization program started in November of 2016 that removed 86 percent of India's currency in circulation. In addition, the government changed the GDP base year for 2011-2012 from 2004-2005. The same change was made earlier for industrial production and wholesale prices indexes, with adjustments in the weights of the different industries. Considering the April 2016-March 2017 period, the economy advanced 7.1 percent, in line with the official estimate but below 8 percent in the previous year.

Year-on-year, private spending rose 7.3 percent, slowing from an 11.1 percent gain in Q4 2016 and gross fixed capital formation shrank 2 percent, following a 1.6 percent gain in Q4. In addition, exports (10.3 percent compared to 4 percent in Q4) rose less than imports (11.9 percent compared to 2.1 percent in Q4). In contrast, government expenditure jumped 31.9 percent, higher than 20.9 percent in Q4.

GDP estimates for Q1 already include revised data for industrial production and wholesale prices. The government changed the base year for those indicators earlier in May, aiming to align them and make them more representative. Manufacturing has now a higher weight in the industrial production index (77.6 percent form 75.5 percent) while electricity production accounts for less (8 percent from 10.3 percent).

The Gross Value Added, that is, GDP excluding taxes, increased 5.6 percent year-on-year in Q1 of 2017, lower than 6.7 percent in Q4 2016. Construction shrank 3.7 percent (+3.4 percent in Q4 2016) and slowdowns were recorded for trade, hotels, transport and communication (6.5 percent from 8.3 percent); financial and real estate activities (2.2 percent from 3.3 percent); manufacturing (5.3 percent from 8.2 percent); agriculture (5.2 percent from 6.9 percent) and utilities (6.1 percent from 7.4 percent). In contrast, mining and quarrying (6.4 percent from 1.9 percent) and public administration and defence (17 percent from 10.3 percent) rose faster.

https://tradingeconomics.com/india/gdp-growth-annual
Guess the GDP figures aren't fake (made up by Modi) anymore, jokes aside. Two more quarters of low growth to go and then GST kicks in.

anybody has calculated GDP in dollar terms yet?

 

[Akshay_Fenix]

anybody has calculated GDP in dollar terms yet?

At current prices its at 151.84 trillion rupees.

At constant price (2011-12) its at 121.90 trillion rupees.

 

[IndianHawk]

At current prices its at 151.84 trillion rupees.

Something fishy .
151.84 trillion INR converts to 2.35 trillion $ at 1$=64.45

But Indian economy was already larger then 2.4 trillion USD in all data by IMF / world Bank.

With even 6% growth it shoud be much more.

 

[Akshay_Fenix]

Government meets fiscal deficit target of 3.5% in 2016-2017

The government on Wednesday said it has achieved the fiscal deficit target of 3.5 percent of GDP in 2016-17.

"Fiscal deficit is 3.51 percent of GDP or Rs 5.35 lakh crore in 2016-17," the Controller General of Accounts (CGA) said while releasing the provisional accounts for the last financial year.

For 2017-18, the government aims to further bring down the fiscal deficit gap between expenditure and revenue up to 3.2 percent.

The CGA further said that revenue deficit during the last fiscal was 2.02 percent of GDP.

As per the provisional data, the fiscal deficit in April 2017 was Rs 2.05 lakh crore, which is 37.6 percent of the Budget estimate, as against 25.7 percent in last year.

The total expenditure of the government in April was Rs 2.42 lakh crore or 11.3 percent of the full-year estimate.

Revenue collection was Rs 35,081 crore or 2.3 percent of the estimate.

Total receipts of the government from revenue and non-debt capital in April stood at Rs 36,529 crore.

The revenue deficit during the month was Rs 1,78,383 crore or 55.4 percent, it said.

Revenue deficit refers to the shortfall in total government revenue realisation from the targeted figure.

http://www.moneycontrol.com/news/bu...fiscal-deficit-target-in-2016-17-2293965.html

After disappointing GDP numbers, some very good news.

 

[Akshay_Fenix]

Something fishy .
151.84 trillion INR converts to 2.35 trillion $ at 1$=64.45

But Indian economy was already larger then 2.4 trillion USD in all data by IMF / world Bank.

With even 6% growth it shoud be much more.

http://mospi.nic.in/sites/default/files/press_release/PRESS_NOTE_FINAL_2016-17.pdf

Here you go, CSO official GDP report. That is where I got the number.

 

[Akshay_Fenix]

Not Just DeMo: PM Modi’s Black Money Chase Is “X” Factor In Growth Slowdown
R Jagannathan- Jun 01, 2017, 5:34 pm

The price for having a cleaner economy, with more taxpayers, less evasion and less corruption, is being paid in terms of postponed investments and growth.

The sharp drop in fourth-quarter GDP growth in fiscal 2016-17 to 6.1 per cent from 7 per cent in the previous quarter, and the even sharper drop in GVA growth (from 6.7 per cent to 5.6 per cent), has largely been attributed to the demonetisation (DeMo). For 2016-17 as a whole, GDP growth was 7.1 per cent (versus 8 per cent earlier), and GVA 6.6 per cent (versus 7.9 earlier).

But, as chief statistician TCA Anant pointed out, the real reason for the drop cannot be attributed solely to DeMo. “Every policy decision has an implication…so has demonetisation, but to disintegrate the impact of one decision is a complex task,” Anant is quoted by The Economic Times as saying.

While Prime Minister Narendra Modi’s political critics will be happy to attribute the entire slowdown to DeMo, the reality is that the economy was decelerating well before 8 November 2016. Look at the GVA (gross value added) numbers below and they tell their own story: GVA, which is GDP minus product taxes plus subsidies, peaked at 8.7 per cent in the January-March quarter of 2015-16. In the following four quarters, it declined steadily, to 7.6 per cent (April-June 2016), 6.8 per cent (July-September), 6.7 per cent (October-December), and 5.6 per cent (the January-March 2017 quarter).

The point to note: the economic slowdown preceded DeMo by at least two quarters. DeMo may only have magnified a slowdown that was already set in motion. It was not the cause of it.

The big question is: what started the slowdown? We can rule out the unhelpful global economy, which has not been any worse last year than it was in the previous four. Two consecutive years of bad monsoon could surely have tipped the economy downwards, but agriculture has a share of just 15 per cent in GDP, and in 2015-16, the second consecutive year of farm distress, GVA growth was actually perky at just under 8 per cent (7.9 per cent).

So why did 2016-17 start sliding?

The answer has to do with three factors, which we can call the X, Y and Z factors. All are inter-related.

The Z factor is corporate over-leveraging and bank bad debts. With companies desperately trying to cut debts, and banks trying to get what they can from debtors, there was obviously very little money left for fresh investment. Gross fixed capital formation (GFCF), which shows the level of investment in the economy, has dropped like a stone over the last six years, and stood at just 27.1 per cent of GDP in 2016-17, down from 34.3 per cent six years ago.

With bank bad debts at over Rs 7 lakh crore now (the December 2016 figure was just under that level), and with corporate after corporate having to sell asset after asset to prevent broader group defaults, investment is unlikely to pick up anytime soon. The latest to teeter on the brink of default is Anil Ambani’s Reliance Communications (RCom),which had debts of over Rs 47,000 crore and was looking to sell its tower business and merge itself out of default. But it can’t do so without banks giving it breathing space for a few months, as cash flows right now are just not enough to service debt.

Earlier, we saw Jaiprakash selling its cement assets to the Birlas, Ruias their oil refining business to Rosneft, GMR and GVK parts of their airports and power businesses, and Vijay Mallya parts of his liquor businesses that were mortgaged to fund Kingfisher Airlines. Even the Tatas under new Group CEO N Chandrasekaran are planning to sell off non-core assets to bring down group debts. When India Inc is in downsizing and sell mode, where is the question of their increasing investment to fund growth? The one big investment that happened, Mukesh Ambani’s massive Rs 1.5 lakh crore investment in Reliance Jio, has pushed other telecom giants to the brink of loss – setting of the possibility of another wave of loan downgrades and possible NPAs (non-performing assets). The RBI has already raised warnings signals about telecom debt. This is a sector crying for new investment, but is currently too over-leveraged (debts were over Rs 4.2 lakh crore) to seriously invest in growing the business.

Then there is the Y factor – which is the pre-emption of large corporate funds by bringing in transparency in the allocation of costly natural resources like spectrum and mines.

In 2015, Rs 1.09 lakh crore was raised at spectrum auctions. Coal auctions raised another Rs 2 lakh-and-odd crore. In 2016, a second round of spectrum auctions raised over Rs 65,000 crore. While not all the money has been collected – it is to be paid in stages – the short point is this: many of India’s biggest business groups have had to sink hundreds of crores to buy natural resources and inputs linked to the businesses they were already in – power, coal, telecom, cement, etc.

When such large amounts of money are pre-empted from the corporate kitty, resources for new investment automatically get crunched.

Then we come to the big X factor, which is the war on black money launched by the Modi government. No Indian government has been so consistent and so relentless in putting in place policies to reduce avenues for easy money from corruption and rent-seeking. This process actually began under UPA-2, which was rocked by scam after scam, but anti-black money policies have been followed aggressively only under Modi.

To track the origins of the slowdown, consider the chronology of several measures to curb black money.

#1: In 2015, Modi announced his first major scheme – the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act. Disclosures under the scheme attracted 60 per cent tax, and the scheme was a flop, garnering just Rs 2,428 crore in taxes. But the scheme effectively ensured that undisclosed foreign assets remain abroad.

#2: The Reserve Bank under Raghuram Rajan also decreed that banks have to disclose all their bad loans by the end of March 2016. This partially explains why after GVA peaked in that quarter of 2015-16, growth has been steadily falling off as banks started spewing red ink all over their balance-sheets and battled with bad loans, curtailing further lending. Borrowers battled with repayments and defaults, reducing appetite for investment.

#3: In 2016, Modi launched his Income Disclosure Scheme for domestic black money, and this garnered over Rs 65,000 crore of disclosures, yielding taxes of over Rs 30,000 crore.

#4: In November 2016, the Benami Transactions (Prohibition) Amendment Act was notified. The Act prescribed draconian measures to ferret out benami properties, which is where most of domestic black money is hoarded. At last count, over 140 notices had been issued for the attachment of benami properties.

#5: This, of course, was followed by demonetisation of Rs 500 and Rs 1,000 notes, thus denting the stock of black money held in cash, or resulting in deposits which may now be scrutinised for sources of funds and possible tax evasion. A lot of loose cash has thus been immobilised at least temporarily. To complement DeMo, the government also introduced its PM Garib Kalyan Yojana, under which undisclosed deposits can be legalised by paying 50 per cent tax, and offering another 25 per cent as a four-year interest-free deposit. This scheme too did not get much of a response, but directionally it is one of a piece with all of Modi’s anti-black money laws.

#6: Three other measures were also taken in 2016 to impede the flow of unaccounted money between India and foreign destinations. In May, the government modified the Mauritius Double Taxation Avoidance Act (DTAA)to tax the short-term capital gains of entities based in that Indian Ocean island. In September, the same was done with Cyprus, and in December, the Singapore DTAA was also amended. The net result: starting this April, capital gains will be taxable at half the domestic rate till April 2019, and after that at the full rate. Tax loopholes have been closed, especially those that allowed domestic black money to “round-trip” and avoid taxes.

#7: On another front, Sebi, the market regulator, started crimping the flows of portfolio investments through participatory notes (P-notes). P-notes are derivative instruments through which investors based abroad can participate in Indian markets without disclosing their identities. The trades are settled abroad. Sebi cracked down on excess anonymity in May 2016, and last month the investment rules were tightened further to ensure that there is more transparency on who is buying or selling. P-notes are now in decline. In 2007, P-note outstandings were as high as Rs 4.5 lakh crore; a few months ago, the outstandings were down to a third of that amount.

The net impact of the closing of anonymous investment flows and tax loopholes means that only legitimate investors can now invest in India, and Indians who want to route their black money into domestic stocks or even their own companies cannot easily do so.

In the past, when India Inc was in trouble over bad debts or dud projects, they could do one or all of these three things: get government and public sector banks to write off their loans; generate easy money by speculating in stocks by using P-notes and other anonymous investment instruments (now closed); or inflate business incomes at home by overinvoicing exports or underinvoicing imports (another way of using funds abroad to fund local corporate revival). All these routes are now harder to adopt.

Under Modi, these avenues are closing or already closed. Funds held abroad are stranded and can’t easily come in, and domestic black money is now tougher to generate. Add the pre-emption of funds for participating in auctions, and there are few rent-seeking opportunities in India. Demonetisation broke the back of the realty industry, by denting demand further. Thus black money held in benami properties is also temporarily impounded as buyers are less willing to pay cash, and are additionally demanding huge discounts.

In the year ahead, with the goods and services tax about to kick in from 1 July, more businesses will be squeezed to enter the tax net. So profits will be harder to come by till the system settles into a fine rhythm.

And then there is banks’ unresolved bad loans mess. This may be gradually brought down only over the next 12 months, with the Reserve Bank now being empowered to force banks to settle their biggest NPAs as soon as possible.

The pincer of bad loans and corporate deleveraging, coupled with the attack on black money, tax evasion and benami transactions, and the final assault on cash-based transaction with demonetisation points in only one direction: India Inc does not have the profit or cash leeway to invest in growth. Growth will not revive too soon.

The price for having a cleaner economy, with more taxpayers, less evasion and less corruption, is being paid in terms of postponed investments and growth.

This is good for us in the long run, but in the short to medium term, there is only pain.

https://swarajyamag.com/economy/not...ck-money-chase-is-x-factor-in-growth-slowdown

 

[Prayash]

Jindal Steel launches 6-MTPA integrated steel plant in Odisha | Business
The Rs 33,000-cr plant at Angul ramps up JSPL's iron & steel capacities significantly

Jindal Steel and Power Limited (JSPL) has launched its 6 million tonne per annum (MTPA) integrated steel plant at Angul (Odidha). The plant was dedicated to the nation by Naveen Patnaik, Chief Minister of Odisha, on May 27, 2017.

“As India looks to reach a steel manufacturing capacity of 300 million tonnes by 2030, I am proud to note that 20 percent of steel will continue to be manufactured in Odisha. My vision is to create 30 lakh additional employment opportunities by 2025, and bring in prosperity for the people of the state. What we are witnessing today is yet another step towards realising this vision,” said Naveen Patnaik on the occasion.

JSPL’s integrated steel plant at Angul will provide direct employment opportunities to over 30,000 people and indirect employment to over 1 lakh individuals. The completion of plant spread over 3500 acres at Angul, with an investment of Rs 33,000 crore, ramps up JSPL’s iron & steel making capacities significantly.

“The completion of all major core iron & steelmaking installations at the 6 MTPA steel plant at Angul is a major landmark defining the future growth trajectory of JSPL. We will aspire to grow exponentially in line with the national steel production capacity target of 300 MTPA by 2030. We continue to dream bigger and continuously work towards building a nation of our dreams,” said Naveen Jindal, chairman, JSPL.

JSPL recently completed all major iron and steelmaking installations at the 6 MTPA integrated steel plant, including India’s largest blast furnace of 4 MTPA at Angul.

“The successful completion and commissioning of 6 MTPA steel plant at Angul is a giant leap forward for the future of JSPL. JSPL has successfully completed its expansion program at a remarkable speed and optimum capital investment levels. The focus is now on sweating the world-class assets to optimum levels, and to further strengthen the operational and financial performance of the company,” said Ravi Uppal, MD & group CEO, JSPL.

The capacity addition would further enhance the cost efficiencies of steelmaking - a continuous focus area integral to JSPL’s business philosophy. The economies of scale imparted by the significant capacity additions and their optimum utilisation would effectuate JSPL’s debt reduction roadmap.
Jindal Steel launches 6-MTPA integrated steel plant in Odisha | Business

Also read:

Odisha approves JSW Steel's $7.8 billion steel plant Reuters - 2 days ago

Angul plant will produce steel plates for defence purposes: Jindal Business Standard - 2 days ago

 

[Prayash]

Waiting for Nifty to hit 10000? Morgan Stanley sees it at 30000 in 5 years
Financial Express

 

[aditya10r]

Waiting for Nifty to hit 10000? Morgan Stanley sees it at 30000 in 5 years
Financial Express

Futures market here i come................................................................................................................

Just think about sensex then

 

[Akshay_Fenix]

Forex reserves at life-time high of $381.167 bn

MUMBAI: India's forex reserves surged by $2.404 billion to reach life-time high of $381.167 billion in the week to June 2 on account of rise in foreign currency assets, the Reserve Bank said today.


http://economictimes.indiatimes.com...e-high-of-381-167-bn/articleshow/59073551.cms

 

[ezsasa]

last year some of us were wondering why was jayanth sinha was moved from Finance ministry to aviation, looks like the answer is Air India privatisation.

 

[Prayash]

world bank projects 7.2 per cent growth rate for india in 2017
More news
●7th pay commission update:central govt employees may get revised allowances from july 18

●India takes US to WTO for failing to drop steel duties

●After RBI's change in risk weight SBI reduces home loan rates by another 10 basis points

 

[Prayash]

Govt may approve one more PSU bank consolidation by March

New Delhi, Jun 9 () Enthused by the success of SBI merger, the Finance Ministry is considering clearing another such proposal in the public sector banking space by this fiscal end with a goal to create 4-5 global sized lenders.

Five associate banks and Bharatiya Mahila Bank became part of SBI on April 1, 2017, catapulting the country's largest lender to among the top 50 banks in the world.

Now, the Finance Ministry is looking to replicate the model in the case of other state-run banks so that they reach critical mass to compete with global peers.

"Consolidation is a must...but decision in this regard would be based on commercially prudent parameters. If the NPA situation gets better, there could be one more merger towards the end of this fiscal," a senior official told .

Toxic loans of public sector banks rose by over Rs 1 lakh crore to Rs 6.06 lakh crore during April-December of 2016-17, the bulk of which came from power, steel, road infrastructure and textile sectors.

Finance Minister Arun Jaitley has on several occasions said India needs 5-6 banks of global size and scale and further consolidation in the banking sector will be done at the appropriate time.

Whenever consolidation happens, it takes into consideration interest of all stakeholders including employees and shareholders, the official said, adding it has to be a win-win for all parties.

A balancing act has to be done before any merger is given clearance by various authorities and regulators, the official added.

The future merger proposals in the banking sector will also require clearance from the Competition Commission of India (CCI) to see if the merged entity is going to create a monopoly.

In the last consolidation drive that saw the light of day in April, CCI nod was needed only in the case of merger of the Bharatiya Mahila Bank (BMB) with SBI. There was no such requirement for merger of associate banks with SBI as they were part of the parent.

The Finance Ministry has sought help of the government think-tank NITI Aayog and global consultancy firms to examine the possibility of next round of consolidation of PSU banks with an aim to create a few lenders of global size and scale.

NITI Aayog's report is expected to set tone of the roadmap for consolidation in the future.

There are factors like regional balance, geographical reach, financial burden and smooth human resource transition that have to be looked into while taking a merger decision, the official said.

The official added that there should not be merger of a very weak bank with a strong bank "as it could pull the latter down".

"There are some low-hanging fruits. Big lenders like Bank of Baroda can take over some turnaround banks in the southern region such as Indian Overseas Bank. Dena Bank could be merged with some large South Indian bank," the official explained.

Five associates and BMB became part of SBI on April 1, 2017, catapulting the country's largest lender to among the top 50 banks in the world.

State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT), besides BMB, were merged with SBI.

With the merger, the total customer base of the SBI reached around 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country. The merged entity began operation with deposit base of more than Rs 26 lakh crore and advances of Rs 18.50 lakh crore.

The government in February had approved the merger of these five associate banks with SBI. Later in March, the cabinet approved merger of BMB as well. SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it. DP ABM

 

[Vishwarupa]

Is job creation really slow in India? Can anyone share some information on this?