SBI chief predicts GDP growth to contract by 8-9% in FY21

There has been a significant improvement in the economy during the second quarter, said Dinesh Khara, chairman, State Bank of India. Khara was speaking at the Hindustan Times Leadership Summit 2020. “I’ll co-relate the improvement with the unlock situation. Unlocks lead to rise in demands, which leads to significant improvement,” Khara said.

“The way Indian economy is reviving post lockdown is giving hopes to many,” Khara added.

Indian economy is projected to contract by a massive 10.3% this year, according to an IMF forecast. Even the Reserve Bank of India expects the economy to shrink by 9.5% in the current financial year. SBI chairman predicted 8-9% contraction for FY21, adding that “all of us are expecting lower contraction in Q2 than Q1.” The Indian economy shrank 23.9 per cent year-on-year in the first quarter of 2020.

“Post-unlock, every day is a new day. The way economic revival is happening, it is giving hope to many. The evaluation matrix is seeing change, in corporate houses too. People will wait for demand revival,” Dinesh Khara added.

“Unorganised sector in rural economy is seeing positive activity. Migrant labourers are returning to cities, according to remittance informance,” Khara explained.

On corporate ownership of banks in India, Khara said, “Much depends on corporate governance, be it public or private ownership. 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.”

“Banking systems apprehensive about slackness or oversight. Regulation has become strict over time,” Khara added.

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