A sudden appreciation or depreciation of the rupee is not good as it adds to the volatility in the market, said Soumya Kanti Ghosh, Group Economic Advisor, State Bank of India, on Friday.
According to him, in case of the rupee weakening, “orderly depreciation” is important.
“The rupee has remained remarkably stable over the last three-to-four years. What is important now is that the depreciation should be orderly. It adds to the volatility in the market,” he told reporters on the sidelines of a banking conclave organised by the Indian Chamber of Commerce (ICC).
India’s GDP estimate for Q1 (April to June) FY19, according to Ghosh, is expected at around 7.7 per cent, while for the full fiscal, it is expected at around 7.5 per cent.
Pick-up in cement production, sale of vehicles and bank credit are said to be some of the factors responsible for the estimates, according to a latest report by SBI.
“This 7.7 per cent for Q1 for SBI. Full year we estimate 7.5 per cent, but there is contingent on first quarter estimate,” said the Group Economic Advisor.
SBI has based its assessment on its Composite Leading Indicator (CLI), which takes into account 18 major macro-economic indicators. However, weak farm sector growth could pull down the gross value-added growth.
Stressed assets
Pointing out that the Insolvency and Bankruptcy Code is the most important banking sector reform in independent India, Ghosh added that resolution was happening under IBC “even though at a slower pace”.
The admitted claims are close to ₹90,000 crore. Hence, the resolution value is about 55 per cent of the admitted claims.
As on June 30, 2018, 32 accounts have been resolved, the liquidation value of which is ₹21,000 crore. The total resolution is about ₹50,000 crore, which is 238 per cent of the liquidation value.
“(The) Indian banking sector is expected to see substantial write-backs by the end of this financial year on account of resolution of stressed assets,” he said.