| | SEPTEMBER 20208Globalization, technological advancements and innova-tions are touching every aspect of our daily lives with the promise of a better world. Para-doxically, the morose sentiment over the global and Indian econo-my in the past few years has been a growing threat. The question is, whether the slowdown is structur-al, cyclical temporary or a phase of mutation that can be stabilized by synchronizing the different actors like Government, private sector and the central bank.Indian economic slowdown is now a reality accepted by leading economists. IMF has slashed GDP growth rate forecast from seven percent to 6.1 percent. Dithering domestic consumption, the under-performance of major sectors like automobiles, non-performing man-ufacturing sector, and increasing NPAs have contributed to the de-celerating economy. Consequent-ly, measures like demonetization, and the introduction of GST & RERA have slowed the economy. In the current economic scenario, a keyword that comes to mind is consolidation. On one hand, there is market-driven consolidation where larger players are engulf-ing smaller players, thereby cre-ating more space for themselves in the market. For instance, the bankruptcy of Jet Airways has led to bigger market share for Indigo and SpiceJet. On the other hand, the Gov-ernment is driving consolida-tion among PSBs to create four big banks. Consolidation helps strengthen balance sheets and brings focus on profitability, but it has an initial negative impact on growth. Consider the bank merg-ers; while public sector banks are in the process of integration and focusing on the NPL issues, their customers are migrating to the private sector banks due to their better customer service and client centricity. The NPL issues created by bankrupt promoters have led to huge capital erosion in the balance sheets of PSBs, due to which they do not have the capital to lend to the eligible customers.These factors combined with the IL&FS crisis have created a liquidity shortfall, making it dif-ficult for NBFCs to get access to wholesale finance. The liquidity concerns of NBFCs and MFIs have made it difficult for SMEs to ac-quire loans curtailing their role in pump-priming the economy. For Headquartered in New York, IBM is one of the world's leading tech services conglomerate well-known for its cutting-edge innovation practices and offerings.By Alyyalur R Akhileshwara, Partner & Industry Leader - Banking & Financial Markets, IBM IndiaINDIAN ECONOMY: AN ENIGMATIC REALITYTHOUGHT LEADERSHIPAlyyalur R Akhileshwara
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