6 ECONOMY

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MUMBAI | 14 DECEMBER 2019 1

Banking on capex for growth: FM Some banks likely to see a

spike in bad loans: Moody’s
INDIVJAL DHASMANA
New Delhi, 13 December "AM HERE FORBES: FM AMONG ABHIJIT LELE

he finance ministry on Friday TO INTERVENE WORLD’S 100 MOST Mumbai, 13 December

T said 32 Maharatna and Navratna

public sector units (PSUs) have
undertaken a capital expenditure of
~98,000 crore till November in the cur-
rent financial year. These PSUs are like-
ly to pump in ~60,000 crore during the
remaining part of the year in a bid to
boost the economy.
The total capex of ~1.58 trillion by
these PSUs, shown in a presentation giv-
en by Chief Economic Advisor
Krishnamurthy Subramanian at a press
conference called by Finance Minister
Nirmala Sitharaman, was higher by
~3,000 crore than the numbers promised
by the finance ministry in September.
Besides, the railways and the min-
istry of road transport and highways are
projected to undertake a capex of ~2.46
trillion by the end of the month,
Subramanian said.
This way, 66 per cent of the budgeted
capex of over ~3 trillion has already been
undertaken, he said.
The economic growth rate fell to over
six-year low of 4.5 per cent in the second
quarter of 2019-20.
The latest figures show that the econ-
omy is still not out of the woods.
Index of Industrial Production (IIP)
contracted 3.8 per cent in October, the
third straight month of decline. The retail
price inflation rate rose to a 40-month
high of 5.54 per cent in November.
Later, on the sidelines, Subramanian
said there is no stagflation in the econo-
my and the rise in inflation is transient.
The government has announced
packages for sectors, such as housing,
exports, non-banking financial compa-
nies, and auto, besides coming out with
general expenditure to boost measures.
To a query, Sitharaman said no other
sector came to the government for help.
She said the government will hold pre-
Budget consultations with various sector
representatives from Monday.
Ahead of the crucial meeting of the
GST Council next week, Sitharaman said
the buzz of an increase in GST rates is
everywhere other than her office. She,
however, did not rule out a hike in GST
rates, saying her ministry is yet to apply
its mind to it.
To a query on whether the economy
is heading towards stagflation, she said,
“No comment on that. I have heard it.
IBC PROVISION NOT RETROSPECTIVE: MCA SECY
Corporate Affairs Secretary Injeti Srinivas
on Friday clarified that the proposal
contained in the amendment Bill on the
Insolvency and Bankruptcy Code (IBC),
which mandates that at least 100
homebuyers have to be there to drag a
company to insolvency, is not
retrospective in nature.
He said those cases where resolution is
Stagflation is a narrative which is going
on. I am hearing it.” Stagflation refers to
a condition of slow economic growth and
high inflation, usually accompanied by
high unemployment.
Many economists, including former
RBI Governor Raghuram Rajan and for-
mer Prime Minister’s Economic
Advisory Council (PMEAC) member
Govinda Rao, have expressed fears of
India getting into the stagflation mode.
She further said there is no denying
the fact that GST compensation is pend-
ing to all states.
“I’m also saying that it is an article of
faith and we should keep up what has
been coming in terms of giving com-
pensation to states,” she said.
On the rising onion prices, the finance
minister said the rates in some places
are coming down with imports of the
commodity.
“With fresh crop coming into the
market, the prices will further decline,”
she said, adding that a Group of
IN THE ECONOMY
WHEN NEEDED...
NOT ENGAGING
IN ANY
PREDICTIONS
ON ECONOMIC
GROWTH"
NIRMALA SITHARAMAN
Finance minister
being carried out cannot be taken out of
the process. However, where the National
Company Law Tribunal (NCLT) has not
admitted the case, petitioners have to
bring together 100 homebuyers to start
the insolvency process.
The proposal would also be applicable
to cases where there are a large number
of individual creditors.
Ministers (GoM) is regularly reviewing
onion prices.
In his presentation, Subramanian
also said various measures have been
taken since August to boost the economy.
These include moderation in interest
rate and infusion of liquidity through
various means.
He said following the Reserve Bank of
India (RBI) guidelines mandating banks
to link their lending rates to external
benchmarks, all public sector lenders
have introduced repo rate-linked loan
products. Around 818,000 repo-linked
loans amounting to ~72,201 crore were
sanctioned till November 27.
According to his presentation, public
sector banks have disbursed ~2.2 trillion
to corporates, ~72,985 crore to micro,
small and medium enterprises (MSMEs),
and ~39,453 crore to retail borrowers. He
said ~60,314 crore capital has been
infused into PSU banks.
He said more than 62 per cent of dues
of 32 PSUs have been cleared in the last
POWERFUL WOMEN
Finance Minister Nirmala Sitharaman
is among the Forbes’ ranking of 100
most powerful women in the world,
a list topped by German Chancellor
Angela Merkel for the ninth
consecutive year.
Other Indians in the list include
HCL Corporation CEO and Executive
Director Roshni Nadar Malhotra
and Biocon Founder Kiran
Mazumdar-Shaw.
The Forbes 2019 list of ‘The
World’s 100 Most Powerful Women’
has been topped by Merkel, 65,
followed by President of the
European Central Bank Christine
Lagarde in the second spot and
Speaker of the US House of
Representatives Nancy Pelosi, ranked
third. Also on the list is Bangladesh
Prime Minister Sheikh Hasina (29).
“In 2019, women around the
globe took action, claiming
leadership positions in government,
business, philanthropy and media.
These trailblazers are not to be
messed with,” Forbes said.
PTI
two months and now only ~4,877 crore
remained to be paid.
To give a boost to the MSME sector,
their bills worth ~12,698 crore were dis-
counted till November 15, Subramanian
added.
As much as ~4.47 trillion has been
sanctioned to non-banking financial
institutions and housing finance com-
panies to support retail lending, he said,
adding that 17 proposals amounting to
~7,657 crore had been approved under
the partial credit guarantee scheme.
Amid debate on the worsening job
scenario in the country, he said casual
workers in the economy declined 5 per-
centage points to 25 per cent in 2017-18
compared to 30 per cent in 2011-12.
However, regular salaried workers
rose 5 percentage points to 23 per cent
during this period.
He said drop in casual labour was
driven by rural workers where there was
a shift from the category to salaried jobs
and self employment.
Banks may see a spike in bad
loans because of stress in the
non-banking financial compa-
ny (NBFC) sector, rating agency
Moody’s said on Friday, warn-
ing that the trend of improve-
ment in key bank metrics is
likely to reverse or slow.
Large exposures to NBFCs
and the sectors they lend to —
such as real estate — leave
banks vulnerable, it said. And,
the weakening of NBFCs’
Cuts GDP growth forecast to 5.6% for ’19
capacity to lend to retail bor- Moody's Investors Service on gross domestic product (GDP)
rowers and small and medi- Friday said it has lowered its growth forecast for India to 5.6
um-sized enterprise (SMEs) 2019 GDP growth forecast for per cent, which is lower than
may add to pressures on asset India to 5.6 per cent as slow 7.4 per cent growth in 2018,"
quality of banks. employment growth weighs on Moody's said in a report.
“The funding challenges at consumption. It expects "India's economic growth
NBFCs are raising asset risk for
banks. This is happening in an
economic growth to pick up in
2020 and 2021 to 6.6 per cent
has decelerated since mid-
2018, with real GDP growth
economy that has grown and 6.7 per cent respectively, slipping from nearly 8 per cent
increasingly dependent on but sees the pace of growth to 5 per cent in the second
non-bank lenders. It is credit remaining lower than past. quarter (April-June) of 2019," it
negative for banks,” it said. "We have lowered our 2019 noted. PTI
“NBFCs and banks are stuck
in a negative feedback loop. among NBFCs, in turn, means With real estate companies
They have been forced to that nonperforming loans at already facing significant
reduce lending, raising refi- the Indian banks that lend to stress, tighter funding will only
nancing pressure among bor- them are very likely to rise.” add pressure and weaken loan
rowers, and translating back Stress is particularly evident performance. Pockets of stress
into loan defaults and further in the real estate sector, where also exist in the retail and SME
stress for NBFCs.” developers often lack the cash sectors, both of which have
Srikanth Vadlamani, vice- flow to fulfill their debt obliga- grown rapidly in recent years
president and senior credit offi- tions, and are reliant on NBFC and are heavily reliant on NBFC
cer, said: “This rising stress funding to roll over obligations. funding, it added.
Somanathan appointed Pranab says
expenditure secretary data must
PRESS TRUST OF INDIA Budget/RE (Revised Estimate) not be
meetings. The series of meet-
New Delhi, 13 December
ings with different depart-
Senior IAS officer T V ments and ministries con-
manipulated
Somanathan was appointed cluded last month.
expenditure secretary on The Budget Estimates for
Friday, as part of a top-level 2020-21 are provisionally
bureaucratic reshuffle effect- finalised after the expenditure
ed by the Centre. secretary completes discus-
Somanathan, a 1987-batch sions with other secretaries
IAS officer, is at present serv- and financial advisers.
ing in his cadre state Tamil In other appointments,
Nadu. Ravi Mittal has been named
The post was Information and
lying vacant since broadcasting sec-
October 29, when retary in place of

PM lines up series of meetings next week Girish Chandra

Murmu relin-
quished it upon
Amit Khare.
Mittal, a 1986-
batch IAS officer
PRESS TRUST OF INDIA
Kolkata, 13 November

ARUP ROYCHOUDHURY & minister are keen to stamp their minister. Industrial Production for being named the of Bihar cadre, is Amid Opposition’s allegation
SANJEEB MUKHERJEE narrative, after various rollbacks Officials said the PMO has October contracted 3.8 per cent, first lieutenant at present special that the government was
New Delhi, 13 December following the previous Budget, also solicited advice from vari- a slight improvement from governor of the secretary, the fudging growth figures, for-
said top government sources. ous ministries and secretaries September which was an eight- newly created Department of mer president Pranab
Prime Minister Narendra Modi Besides the scheduled meet- for their inputs on the Budget year low. Retail inflation rose to Union Territory of The post was lying Financial Mukherjee has said the sanc-
and his economic departments ings, the sources said, the Prime and a series of sectoral meetings 5.54 per cent for November. On Jammu and vacant since Services. titity of data must be kept
have lined up a series of meet- Minister’s Office (PMO) is with them is scheduled. November 29, the official data Kashmir. October 29, when Khare will intact and “not manipulated”.
ings with economists and advi- expected to hold several meet- As reported earlier, after the showed that gross domestic ]The addition- Girish Chandra now serve as sec- He also lauded the coun-
sors next week to discuss ideas, ings with top secretaries and criticism and rollbacks that fol- product rose 4.5 per cent for the al charge of the Murmu vacated retary, the try’s first prime minister
which may find their way into officials on various ongoing lowed the 2019-20 post-election July-September quarter — the Department of it upon being Department of Jawaharlal Nehru for the
the 2020-21 Budget, in schemes, their per- Budget, the political leadership slowest in 26 quarters, and Expenditure was named the first Higher planned development of the
a bid to boost the sag- RUN-UP formance and also in the government has taken worse than the 5 per cent for Q1. given to Atanu lieutenant Education, in country under him through
ging economy. TO THE how some of them greater control of the Budget- What was even more alarm- Chakraborty, a governor of the place of R the Planning Commission.
On December 19, could be tweaked for making process for 2020-21. ing that manufacturing activi- 1985-batch IAS newly created Subrahmanyam, The body that used to prepare
the NITI Aayog will better results. One of the themes of the ty contracted 1 per cent in the officer of the Union territory who has been five-year plans was disman-
hold a meeting with The sources said upcoming Budget will be September quarter, down from Gujarat cadre, of J&K appointed secre- tled by the Modi government
public and private sec- some of these could “encouraging private invest- 5 per cent in the previous quar- Secretary tary, the and ‘Niti Aayog’ was brought
tor economists; the BUDGET focus on subsidy ratio- ment”, an initiative being driven salaried classes, and have tax ter. Worse, nominal GDP Economic Affairs Department of in its place.
next day, Finance 2020-21 nalisation, expanding by top levels at the Centre. sops for small, medium and growth slipped to 6.1 per cent, in the Finance Ministry. Social Justice & “When I read in newspa-
Minister Nirmala the digital footprint of To that extent, in a bid to micro enterprises. the slowest in nearly two The appointment of new Empowerment. pers that in some debate in
Sitharaman will meet experts Ayushman Bharat, and making ensure more liquidity in the sys- The prime minister’s meet- decades. Growth in invest- expenditure secretary comes Senior bureaucrat Sushil Parliament on in some state
for pre-Budget consultations, the Swachh Bharat Mission tem and revive animal spirits in ing with economists and experts ment (gross fixed capital for- a month and a half ahead of Kumar will be Secretary assembly the data are ques-
and on December 21, the prime effective. the private sector, the upcom- is an annual affair ahead of the mation), at a mere 1 per cent the Budget for 2020-21. Mines. He is additional secre- tioned, I feel sad. I used to take
minister will receive briefings Several of these presenta- ing Budget may scrap long-term Budget, but it assumes special was the least since the The finance ministry had tary, Department of pride in the authenticity of the
and presentations from various tions were to be made before capital gains tax, shift the bur- significance this time with the December 2014 quarter. kick-started the exercise to Agricultural Research and Economic Survey which is
departments, and advisors. Modi from October onwards but den of dividend distribution tax Indian economy under stress. The investment rate in Q2 prepare the Budget for Education, and Secretary, brought by the chief econom-
In the 2020-21 Budget, the had to be postponed because of from companies to sharehold- The official data released on stood at 27.6 per cent, the lowest the next fiscal year from Indian Council of Agricultural ic advisor of the finance min-
prime minister and the finance prior engagements of the prime ers, provide income tax relief for Thursday showed the Index of in 11 quarters. October 14 with pre- Research. ister every year.

From garden city to gridlock hell

The last of a five-part series shows how
the Bengaluru metro has helped relieve
traffic jams but problems remain
SAMREEN AHMAD
Bengaluru, 13 December
Known in happier times for its clement
climate, Bengaluru is now synonymous
with gridlock. The roads teem with 8.5
million vehicles, most of them
scooters. The speed of a car on
the Outer Ring Road during
the rush hour slows down to
around 5 km per hour – the
speed of a person walking.
Worse is to come.
Over the next decade,
another four million vehicles
are expected to add to the traffic
nightmare. The Revised Master
Plan 2031 put out by the
CRUMBLING
CITIES:
BENGALURU
Bangalore Development
Authority in 2017 said almost 12 PART-V
million residents already waste
600 million man-hours in traffic jams —
a productivity loss of ~3,700 crore, not to
mention the ~1,350 crore spent on fuel,
only to idle in traffic.
The bus system is pretty good with
6,600 buses on the roads. But it’s the
metro that has made a difference.
Bengaluru was a latecomer to the cities-
with-a-metro club. The first phase of the
metro, known as Namma Metro, began in
2011 and connected a short 6.7 km
last bit of the journey.
“Approximately 42 per cent of Bounce HOW BENGALURU
rides either originate or culminate at
metro stations,” said the company. Its STACKS UP
13,000 dock-less scooters are currently
notching up 100,000 trips in a day. THE STATE OF PUBLIC
“Public transportation cannot be TRANSPORT IN THE CITY
stretch. Since then, several more flexible enough to cater to everyone’s
stretches have been connected. The demands but it could be a robust METRO NETWORK
network runs through 119 km and carries infrastructure to make long commutes
around 400,000 passengers per day. easier and affordable. The short flexible 50 42 119 km
But in reality, the metro has the journey that commuters need when they No. of No. of length of
capacity to carry a much higher number get out of the bus or metro station is trains stations network
of passengers. And heavily where we come in,” said Varun Agni, co- LAST-MILE SITUATION IN OTHER CITIES
congested areas that house the ‘IT
Corridors’, namely Whitefield and
founder and CTO at Bounce.
Another start up, Yulu, offers a
400,000 DELHI MUMBAI
ITPL, are yet to be brought into network of blue bicycles and e-bikes
Average daily ridership
the metro network. which run between pick up and drop off Metro's feeder fleet 200,000 150,000
“To carry more passengers, we areas across the city called Yulu Zones. A BMTC plus autorickshaws taxis
need to add extra bogies to the total of some 7,000 bicycles and e-bikes 174 1,000
current trains and also introduce
more metros, elevated or
make over 30,000 rides per day in six
busy neighbourhoods such as
6,600 45 non-AC e-rickshaws at 11 stations CHENNAI
No. of buses No. of depots midi buses across Delhi-NCR
underground, to expand public Indiranagar, Whitefield, HSR layout, 100,000 E-autorickshaws
transport,” said traffic expert
M N Sreehari.
Outer Ring Road, Electronic City,
and Jaynagar.
2,500 Kiosks by Ola 300,000 autorickshaws (pilot)
No. of routes and Uber plus autorickshaws
Even more importantly, the “First-mile and last-mile connectivity KOLKATA
government, in building the is a big opportunity for us. It is not a fad
metro, seems to have neglected but a need which will is there today and 3.6 million 200,000 150,000 130,000 100,000
one crucial link in the chain: last mile will be there tomorrow,” said Yulu co- Average daily ridership plus e-rickshaws manual rickshaws e-rickshaws plus autorickshaws
connectivity. Only when commuters can founder and CEO, Amit Gupta.
walk out of a metro station and find a way Given the huge vacuum that needs to
of reaching their homes will they leave be filled, it’s no surprise that two other additional 56 electric buses as metro over 60 per cent of Bengaluru roads are we should develop 1,500 roads across the
their cars and scooters at home and opt companies, Loca Rides and PepRide, feeder buses to cover the last mile. narrow and once they have been cut into city to be pedestrian-friendly,” said
for public transport. have also begun offering cab-sharing Bengaluru used to be a Garden City two lanes, the space for people to walk Mahesh in his proposal which also
Companies such as Bounce and and e-rickshaw services exclusively for where people enjoying walking because virtually vanishes. suggests that two metres for a proper
Vogo are trying to fill the vacuum by metro stations. the weather was pleasant and there was Urban planning expert Ashwin footpath should be left whenever a new
offering two-wheelers for rent. When Even the city transport agency, the plenty of open space. Now they avoid it Mahesh has given the civic authorities a road is built.
they walk out of the metro, commuters Bangalore Metropolitan Transport because there are so few pavements. proposal named ‘Kaaludaari Bengaluru:
can hire a scooter or a bicycle for the Corporation, is finalising tenders for an Urban planning experts estimate that A Fully Walkable City’. “Ideally, over time Series concludes