Press Trust of India
New York, July 6: India’s banking sector currently faces some stress mainly due to ‘stalling’ of projects between 2011-2013 and efforts are being made to ensure the ‘de-bottlenecking’ of these projects, SBI Chairman Arundhati Bhattacharya said. “The banking sector (in India) faces some amount of stress at this point of time mainly because of the kind of stalling of projects that we saw happen between 2011-2013. Currently we are trying our level best to ensure the de-bottlenecking of all of these projects that got stalled. Some amount of that has been done and a lot still needs to be done,” Bhattacharya, 60, said.
There is ‘obviously’ an issue in respect of more and more capital requirement for the banking sector itself and “we are working on various means of ensuring that the banking sector itself is strengthened,” she has at a conversation organised by the Consulate General of India in association with State Bank of India and the Indus Entrepreneurs on India-Changing Economic Landscape – Opportunities and Challenges’. Bhattacharya, who had met investors and rating agencies during her visit to the city, said the macro-economic parameters in the country are ‘very good’, saying the fiscal deficit is well contained.
She pointed out that inflation is ‘quite well-contained’ and India should be well within the ‘glide path’ set by the Reserve Bank of India for the Consumer Price Index (CPI) inflation to be five per cent or less by January 2017. “We think we will get there,” Bhattacharya said, adding that there had been a recent uptick in CPI but that was mainly on account of vegetable and pulses and the core CPI is actually showing a constant downtrend. She said the interest rates are also coming off from their historical highs and “currently they are quite low but may be not low enough to really kick start a lot of investments”. Bhattacharya said the per capita consumption by Indians of both steel and power is one of the lowest in the world. “There is a huge consumption gap already existing in India and as demand comes back in, it is expected that consumption gap will drive productivity and we would see many of these assets coming back on stream.
“I believe overall we are very close or at the inflection point where the economy is concerned. The government has been very wise in bringing about the right kind of changes,” she said, adding that the government has given the right kind of impetus with its various flagship progammes like ‘Start-up India’ and ‘Digital India’. “We feel that there is a very real possibility that the impetus that the government is going to take, will take route and will enable the country to move forward. This is the best time to be in India,” Bhattacharya added. On Brexit, Bhattacharya described the referendum as a “wrong step” saying the world today has to globalise and get more connected and collaborative. “You cannot roll back what has already happened and become protectionist. Regarding business itself, we don’t believe there will be a very large setback for a very large period of time because the financial sector in the UK was always the most open and the most vibrant. Therefore to see it on a reversal path seems a little difficult for us. We have to still assess what the impact will be,” she said.
