Making India $5 trillion economy challenging but achievable: PM Modi

Munbai/New Delhi, May 4: India expects bad debts at its banks could double after the coronavirus crisis brought the economy to a sudden halt, a senior government official and four top bankers said.

Indian banks are already grappling with 9.35 trillion rupees ($123 billion) of soured loans, which was equivalent to about 9.1% of their total assets at the end of September 2019.

"There is a considered view in the government that bank non-performing assets (NPAs) could double to 18-20% by the end of the fiscal year, as 20-25% of outstanding loans face a risk of default," the official with direct knowledge of the matter said.

A fresh surge in bad debt could hit credit growth and delay India's recovery from the coronavirus pandemic.

"These are unprecedented times and the way it's going we can expect banks to report double the amount of NPAs from what we've seen in earlier quarters," the finance head of a top public sector bank told Reuters.

The official and bankers declined to be named as they were not officially authorized to discuss the matter with media.

India's finance ministry declined to comment, while the Reserve Bank of India and Indian Banks' Association, the main industry body, did not immediately respond to emails seeking comment.

The Indian economy has ground to a standstill amid a 40-day nationwide lockdown to rein in the spread of coronavirus cases.

The lockdown has now been extended by a further two weeks, but the government has begun to ease some restrictions in districts that are relatively unscathed by the virus.

India has so far recorded nearly 40,000 cases of the coronavirus and more than 1,300 deaths from COVID-19, the respiratory disease caused by the coronavirus.

'RIDING THE TIGER'

Bankers fear it is unlikely that the economy will fully open up before June or July, and loans, especially those to small- and medium-sized businesses which constitute nearly 20% of overall credit, may be among the worst affected.

This is because all 10 of India's largest cities fall in high-risk red zones, where restrictions will remain stringent.

A report by Axis Bank said that these red zones, which contribute significantly to India's economy, account for roughly 83% of the overall loans made by its banks as of December.

One of the sources, an executive director of a public sector bank, said that economic growth had been sluggish and risks had been heightened, even ahead of the coronavirus crisis.

"Now we have this Black Swan event which means without any meaningful government stimulus, the economy will be in tatters for several more quarters," he said.

McKinsey & Co last month forecast India's economy could contract by around 20% in the three months through June, if the lockdown was extended to mid-May, and growth in the fiscal year was likely to fall 2% to 3%.

Bankers say the only way to stem the steep rise in bad loans is if the RBI significantly relaxes bad asset recognition rules.

Banks have asked the central bank to allow all loans to be categorized as NPAs only after 180 days, which is double the current 90-day window.

"The lockdown is like riding the tiger, once we get off it we'll be in a difficult position," a senior private sector banker said.

Mumbai, Apr 14: The Shiv Sena and NCP said Prime Minister Narendra Modis address to the nation on Tuesday lacked substance as he did not suggest ways to strengthen the economy or a relief package for the poor and those worst hit by the lockdown.

Shiv Sena spokesperson Manisha Kayande also took a dig at the prime minister, saying he thankfully did not give any activity to people this time like clanging utensils or lighting lamps.

Modi on Tuesday announced that the lockdown across the country will be extended till May 3, saying the measure has produced a significant outcome in containing the infection.

He said implementation of the lockdown will be strictly ensured in its second phase and detailed guidelines will be brought out on Wednesday to ensure that outbreak does not spread to new areas.

Some relaxations may be allowed after April 20 in places where there are no hotspots, he said.

Kayande said Modi could have announced extension of the lockdown on Wednesday itself along with the new guidelines, instead of declaring it separately.

"He could have elaborated steps to be taken to tackle the coronavirus, relaxing restrictions on movements in different areas (depending upon threat posed by the disease)," she said.

"His speech normally is more of a rhetoric than substance. Thankfully, he did not give any other event to the people like lighting up lamps or clanging utensils. There was nothing substantial (in the address), the only takeaway was that the lockdown has been extended, she added.

Maharashtra Minister and NCP national spokesman Nawab Malik noted that Modi talked about helping the poor.

"But, he could have announced a package on behalf of the central government to help the poor, those working in the unorganised sector who are the worst hit due to the lockdown.

There was no mention of it anywhere," Malik said.

Another NCP spokesman Mahesh Tapase said it was expected that the prime minister would address the economic concerns being faced by the country.

"The least to expect was the announcement of a slew of measures to kick-start the economy in a phased manner as and when the restrictions are lifted, he added.

Tapase said the employers and employees wanted to know from the government how recession and unemployment will be tackled in the time to come.

"Access to capital for business, especially for MSMEs and agriculture, is a big concern. Supply and logistics is the cornerstone of economic activity which has come to a virtual standstill," he said.

The 2020-21 fiscal looks grim and hence, the right stimulus from the government coupled with a renewed zeal by the industry will only bring the economy back on track, he suggested.

New Delhi, Mar 3: A day after two new cases of novel coronavirus that included one from Delhi were reported, the Health Ministry on Tuesday said six cases with "high-viral load" were detected during sample testing in Agra and these people have been kept in isolation. The six people had come in contact with a 45-year-old patient from Delhi, whose case came to light on Monday, and they include his family members.

According to government sources, the man, who is a resident of Mayur Vihar, had visited them in Agra.

The six have been kept in isolation at Safdarjung Hospital in Delhi and their samples are being sent to NIV, Pune for confirmation.

Contact tracing of the people who came in contact with the six is simultaneously being done through the Integrated Disease Surveillance Program (IDSP) network, the ministry said in a statement.

Sources said the patient from Mayur Vihar was shifted to a quarantine ward at Safdarjung Hospital on Sunday night.

His other family members have been asked to stay alert and look out for symptoms. One accountant, who came in contact with the man and some of his family members, was also quarantined, they said.

India on Monday reported two new cases of the novel coronavirus, one from Delhi and another one from Hyderabad. The government has stepped up its efforts to detect and check the infection which has killed 2,912 people in China.

On Monday, Rajasthan Health Minister Raghu Sharma had said that an Italian tourist tested positive for coronavirus in Jaipur.

The first sample collected from him on February 29 tested negative but his condition deteriorated, so a second sample was collected which tested positive on Monday, the minister said, adding, "Since there is a variation in the reports, the samples have been sent to the NIV, Pune for testing".

India had earlier reported three cases from Kerala, including two medical students from Wuhan in China, the epicentre of the deadly novel coronavirus. They had self-reported on their return to the country and tested positive for the infection. They were discharged from hospitals last month following recovery.

The infected person from Delhi had travelled to Italy, while the other patient who tested positive for the COVID-19 infection is from Telangana and had recently travelled to Dubai.

Both the patients had self-reported after they developed symptoms.

"They tested positive. They are stable and being closely monitored," ministry said on Monday.

The government has asked people to avoid non-essential travel to Iran, Italy, South Korea and Singapore and said India was in discussions with authorities in Iran and Italy, two countries badly affected by the infection, to evacuate Indians there.

The novel coronavirus or COVID-19, which originated in China, has spread to over 60 countries.