During the 18th Hindustan Times Leadership Summit, Dinesh Khara said that a remarkable enhancement is seen in India’s economy during the second quarter. Khara is the chairman of the State Bank of India. He added that he correlates the improvement with the unlock situation. “Unlocks lead to a rise in demands, which leads to significant improvement,” he said.
Furthermore, Khara said that the way the Indian economy is reviving post lockdown is giving hope to many. The Centre appointed Dinesh Khara as the chairman of India’s biggest bank a month ago. At the HTLS 2020, Khara asserted that the economy of the country will see a revival due to the lifting of the lockdown. He said that while the Covid pandemic induced lockdown affected the economy, the lifting of the lockdown will improve the economy significantly.
An IMF forecast predicts the Indian economy to contrast by a gigantic 10.3% this year. Moreover, the Reserve Bank of India (RBI) expects a 9.5% contraction in the current financial year.
Khara predicts the economy to shrink by 8-9%. He added that they are expecting a lower contraction in the second quarter than the first. The Indian economy contracted 23.9% year-on-year in Q1 2020. His comments came one day before the government officially releases the quarterly GDP estimates for Q2 2020-21. This comprises the months from July to September 2020.
Small and Medium Enterprises will be the next growth story: Dinesh Khara
Khara said that every day is a new day post-unlock. He also said that the way economic revival is happening is giving hope to many. “The evaluation matrix is seeing change, incorporate houses too. People will wait for demand revival,” he added.
Moreover, Khara said that they have seen positive activity in the unorganized sector. He also said that migrant laborers are returning to cities as per the remittance information.
Additionally, the SBI chairman said that small and medium enterprises will be the next growth story post-pandemic. He did mention that this has presented with both risks and opportunities. Khara added that banks would have to be alert on their asset quality while pointing to the risk factor.
Khara also spoke on the RBI proposal to allow big businesses and corporates to own banks. Regarding corporate ownership, Khara said that it depends mostly on corporate governance, be it public or private ownership. He also said, “As long as corporate governance is tight, ownership structure does not matter much. When law is in place, it is important how it is being implemented by management.”
Furthermore, Khara added that banking systems are not easy about “slackness or oversight”. He said, “Regulation has become strict over time.”