New Delhi: Congress on Friday said that the latest GDP figures which show growth rate at 5 per cent were “dismal and disappointing” and accused the government of indulging in “headline management” instead of addressing the structural issues ailing the economy.
The economic growth slowed to a seven-year low of 5 per cent in April to June quarter from 8 per cent a year ago, government data showed on Friday.
Congress leader Randeep Singh Surjewala stressed that there is a complete economic downturn, virtual shutting down of manufacturing, lagging exports and surging imports, besides the loss of millions of jobs in all sectors, Congress leader Randeep Surjewala said financial mismanagement and a “spate of economic emergency prevails and pervades the entire economy”.
He said that the “dismal and disappointing” Gross domestic product (GDP) data only reflects it, adding that the malady is much bigger than what it appears to be.
“The myopic BJP government is pre-occupied in shoddy headline management and cover-up job, instead of addressing the structural issues ailing the economy. This is a classic case of quacks turning into surgeons!,” Surjewala said in a tweet.
Congress media chief Surjewala’s response comes after the government announced a merger of 10 public sector banks (PSBs) into four strong lenders with countrywide networks and global reach to boost credit and revive economic growth in the nation’s bid to become a five trillion dollar economy in the next five years.
After this, the total number of PSBs will come down to 12 from 24 banks, said Finance Minister Nirmala Sitharaman at a press conference.
Apart from this, the government announced Rs 55,250 crore upfront as a capital infusion in the PSBs.
“In 2017, where there were 27 PSBs. There are now only 12 PSBs operating to target the 5 trillion dollar economy,” she said.
Sitharaman said the Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged into one entity to make the second-largest PSB with a business of Rs 17.95 lakh crore and 11,437 branches.
Canara Bank and Syndicate Bank will be merged to become fourth-largest PSB with a business of Rs 15.2 lakh crore. Union Bank of India, Andhra Bank and Corporation Bank will become fifth largest PSB while Indian Bank will merge with Allahabad Bank to become seventh-largest PSB with the business of Rs 8.08 lakh crore.
Bank of India and Central Bank of India will continue as individual entities. Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sindh Bank will also continue to operate on their own.
“These big banks will have enhanced capacity to increase credit and bigger risk appetite, with a national presence and global reach,” said Sitharaman. Nearly 88 per cent of all PSB business will be with these consolidated banks.
The government’s intention is not just to give capital but also give good governance. There is no government interference in commercial decisions of banks, said the Finance Minister adding that no retrenchment has taken place post the merger of Bank of Baroda, Dena Bank and Vijaya Bank. The staff has been redeployed and best practices in each bank have been replicated in others.
“Gross non-performing assets have come down from Rs 8.65 lakh crore to Rs 7.9 lakh crore,” she said. “Special agencies have been formed to monitor loans above Rs 250 crore to avoid a Nirav Modi like situation.”
Four non-banking finance companies (NBFC) have already found liquidity solution through a settlement with banks, said Sitharaman.
All PSU banks will now have a non-executive chairman, a position earlier existed only in State Bank of India (SBI), India’s largest lender. The PSBs will have to appoint a Chief Risk Officer, who will be provided market-level compensation. Longer terms will be given to directors on management committees to ensure continuity.
The Finance Minister said in the 2.6 trillion dollar Indian economy, credit availability currently stands at $1.9 trillion, or nearly 72 per cent of GDP. She said the government is committed to improving credit flow and eight PSBs have already launched repo-linked loans since her booster measures for the economy last Friday.
“We need to lay a strong foundation for the financial sector,” said Sitharaman. “About 3.38 lakh shell companies have been closed. The resolutions for stressed assets are happening through the Insolvency and Bankruptcy Code.”