Expecting FY21 GDP contraction to be less than 9.5%: PNB MD & CEO

Says the country is seeing rural economy coming back, is confident urban and metro economy will also grow

The contraction in gross domestic product (GDP) for the full fiscal year could be less than 9.5 per cent, Punjab National Bank (PNB) Managing Director and Chief Executive Officer S S Mallikarjun Rao said.

After a 23.9 per cent contraction in the first quarter, the Reserve Bank of India (RBI) projected real GDP to fall by 9.5 per cent for the full fiscal year, anticipating positive growth in the fourth quarter.  “We also believe that. On the contrary, my expectation is that it would be much better than the projection because we are seeing rural economy coming back and urban and metro economy will also grow.” 

He said green shoots were being seen in sectors such as automobiles and there were signs of coming back in cement, steel, road projects, and infrastructure. “Only hospitality, tourism, and aviation probably will be impacted for some time,” he said. 

The Covid-19 pandemic has seen large-scale migration of workers to home states. Less labour-intensive industries are coming back on track much faster, he said. “We expect human behaviour to come back to normal working very shortly. Some people in the logistics industry have started coming back. Once logistics industry and supply chain start working right, everything will fall in shape.”

Rao was addressing a press conference on a visit to Kolkata to review the business growth and progress in amalgamation of United Bank of India and Oriental Bank of Commerce in eastern India.

On the amalgamation, he said the process would be completed by March 31, 2021. The business process integration was effective April 1, 2020, and the human integration and related transfers have been undertaken.

About 500 locations will be rationalised by March 2021. In the northern and eastern parts of the country, Rao said, the amalgamated entity had a strong presence. “Wherever there are superfluous outlets within 500 metres, we will rationalise them. They will be used as an additional outlet in other parts of the country where we don’t have a presence,” he added. 

Rao pointed out that because of the Prompt Corrective Action on UBI, enhan­cements were not forthcoming. 

“Now for all MSMEs, we are prepared to enhance the limits, wherever it is required and we are very much focused on that,” he said.

The focus in the east will be on MSME, retail, and investment credit in agriculture in addition to ongoing lending under KCC.