HOME > BUSINESS > Indians are spending, Indian companies are not – DBS

Indians are spending, Indian companies are not – DBS

dbsSentiment in the Indian private sector remains low, even as individual consumption is starting to pick up, Singapore-based DBS bank said.

“Industrial lending slowed to 0.5% year on year in Apr-May in contrast to the personal loans that jumped 19.4%,” the bank said in a note to its clients.

DBS said a combination of factors has delayed recovery in the sector.

Firstly, capacity utilization is down five points since 2014 and near lows at 70% this year, it pointed out.

“Business survey results saw they don’t have any plans to add capacity over the next six months. Poor demand conditions, high cost of borrowing, delayed clearances and cost escalation were named as the main constraints.

“Secondly, exports remain under pressure limiting visibility of orders and thereby lowering the need to deploy or build capacities,” DBS said.

It said that exports could start improving due to the ‘base effect’ of poor numbers in the comparison periods kicking in, but export receipts are still about 16% below 2014 levels — when they started declining.

Poor private sector performance have also translated to asset quality concerns for banks, the bank added.

“Gross non-performing assets jumped to 7.6% of total advances by Mar 16 and are likely to surpass 8% by Mar 17. This has hurt credit availability,” it added.

India’s growth this year is likely to be primarily driven by private consumption and to a lesser extent government spending, while private sector activity is yet to recover, the bank added.

Higher public investments (helped by off-budget funding) and FDI inflows are expected to crowd-in private sector interests next year, it added.

Even after Much celebrated Modi Government’s Make In India project, stalled projects in manufacturing, construction and real estate projects under implementation remained high at 12.3% in 2Q16, bulk of which accrued to private sector projects, according to the Centre for Monitoring Indian Economy.

Investment spending fell 1.9% year on year in 1Q 2016, from 1.2% in late-2015.

“Not surprisingly, new investment announcements slipped in the quarter, with private sector commitments plunging 60% quarter on quarter. Corporate earnings are poised to gain some ground this quarter, but manufacturers’ pricing power remains under pressure,” said DBS.

Follow ULTRA.news
Expecting waivers, farmers stop paying back bank loans? The write-off of farm loans in Uttar Pradesh and Maharashtra seems to be encouraging farmers in other states to stop paying back their farm loans to make sure that they will get the benefits of any farm loan waiver program in their state. This has led to a sharp increase in farm ...
IT companies using illegal tactics to force workers to resign: FITE The Forum for IT Employees, arguably the IT workers rights organization with the largest number of well-wishers and supporters, accused IT companies of using illegal and unethical means to force their workers to submit their resignations.In a meeting with Maharashtra Chief Mi...
Demonetization took India forward by 3 years – SBI The demonetization of currency notes late last year has doubled the number of card transactions and helped push India's payment digitisation by three years, State Bank of India said in a note."Even after seven months post demonetization, the transaction value is quite large ...
Telcos Change Tack as Net Neutrality Fight Enters Final Round in India A campaign by Internet Freedom FoundationIf you thought the fight over net neutrality was over with the sending of 1 mln emails to the TRAI two years ago, think again.The telecom service providers, who lost out that in the first round, are back. This time, however, their...
Indian IT industry facing layoffs as conditions worsen, warns Assocham Trump unveiled his 'Buy American, Hire American' program yesterdayIndian IT companies are bound to see "some laying off" of their work force back home due to various negative forces impacting the industry, Assocham -- an association of various industries -- warned."With ...
Rs 1.7 lakh cr deposited via demonetization may not be withdrawn – SBI Monthly cash withdrawals for all banks | source:SBI ResearchThe Indian banking system is likely to get a permanent liquidity boost of Rs 1.7 lakh cr due to the demonetization of high-denomination bank notes, State Bank of India chief economic adviser said in a note to bank c...
After missing twice, India comfortably meets power sector targets for 12th five-year plan After missing its targets by wide margins in the previous two five-year plans, India is all set to comfortably meet or exceed all its power sector targets for the 12th five-year plan that ends this month.Five-year plans, borrowed from the Soviet Union, are a legacy of Nehruvi...
Wholesale price inflation hits 3-year high on high diesel prices High fuel prices, particularly that of diesel, lifted India's wholesale price index to its highest level since the Narendra Modi government took power almost three years ago.On an overall level, wholesale price of various items jumped 6.55% in February when compared with ...
No immediate plans for universal basic income: Indian Government India's welfare budget, 2016-17The Indian government has no immediate plans or proposals to institute a scheme of 'unversal basic income' in place of the myriad social welfare scheme run by the country at present, the finance ministry said in response to a query.The clar...
Gadkari to miss ambitious highway target for 2016-17 Nitin Gadkari, who is slowly building up a reputation as a pragmatic and capable minister, is likely to face major disappointment in the ongoing financial year as his ministry is unlikely to meet the steep road construction target it set for itself.Unlike the term of the ...
DEMONETIZATION: SBI sees GDP growth fall to 6.1%, miss govt projection of 7% The country's largest bank, State Bank of India, said today that it expects the growth in India's gross domestic product to fall to 6.1% or lower in the current year from 7.9% last year due to the impact of demonetization.It said the projection by government of India's Centra...
Demonetization: Modi announces bumper prizes; 15 lakh users to get 1,000 rupees Narendra Modi announced several 'prize schemes' to promote cashless transactions.Under the schemes announced today, there will be two sets of prizes for consumers and another for small merchants.Under the first scheme, any customer who uses any electronic form of payment,...
DEMONETIZATION: Wholesale Price Inflation falls to 3.15% in November The annual rate of inflation, based on monthly WPI, stood at 3.15% for the month of November, 2016 as compared to 3.39% for the previous month and -2.04% during the corresponding month of the previous year.The fall is largely expected due to the impact of the withdrawal of h...
Petrol Pumps, Airlines Will Not Take Old Notes From Saturday | DEMONETIZATION Old notes will no longer be accepted at petrol pumps and airline ticket counters starting from Saturday, according to sources.So far, petrol pumps and airlines had been given an exemption from demonetization of 500 and 1000 rupee notes.However, in an effort to control...
Fitch revises US growth estimates on Trump election, says protectionism to rise The surge in populism and anti-establishment sentiment witnessed in the Brexit vote and Donald Trump's victory in the US presidential election seem likely to push structural policies in the direction of economic nationalism, said Fitch Ratings in its latest global economic outloo...
DEMONETIZATION: How some earned lakhs standing in queues The government has banned over-the-counter exchange of old 500- and 1000-rupee notes due to suspected gaming of the system by those with black money. According to banking industry sources, the over-the-counter exchange system was being massively misused by hawala operators and ot...
Despite Demonetization, India will beat China in GDP growth: Fitch Ratings Despite a moderation in India's GDP growth rate in the short term due to cash crunch, the Indian economy will still grow faster than that of China, global ratings agency Fitch said."We still expect India’s GDP growth to trend higher than China’s in the medium term," said the ...
Fitch says demonetization gains may not last Fitch Ratings said the positive effects are unlikely to be strong and sufficiently enduring "to support credit profiles" and will impact GDP growth in the current quarter.Though the gains will be substantial in the short-term, they may not last as people may still go back...
Hiring slows in October due to festival effect – Naukri.com Hiring activity fell 8% October this year compared to the same month a year ago, according to Naukri.com's Job Speak Index.This dip was primarily caused by the festive season which saw Dussehra, Durga Pooja and Diwali fall in October, the company said. "Hiring activity ge...
RBI chests have enough cash – ICICI Bank CEO ICICI Bank Chief Executive Officer Chanda Kocchar today said the Reserve Bank of India's currency chests have enough cash and there is no situation of scarcity for banks in securing notes.Kocchar also said that all banks including hers are bringing more and more ATMs into wo...
Chidambaram says Congress didn’t demonetize because it was costly Former finance minister P Chidambaram said the previous Congress governments had also considered attacking black money by swapping currency notes, but decided against it as it was considered too costly.Talking to mediapersons, Chidambaram said the cost of swapping the notes w...
Modi’s currency move gets Morgan Stanley thumbs up US-based Morgan Stanley has given its thumbs up to Narendra Modi's bold and unprecedented move to curb illegal funds by swapping currency notes.The government announced on late yesterday night that it will demonetise the high denomination currency -- Rs. 500 and Rs. 1000 note...
RBI’s OFFICIAL GUIDE on how to exchange currency notes of 500, 1000 The Reserve Bank of India has released the following question and answers to alleviate citizens' doubts about the new ban on 500 and 1000 rupee notes.We are reproducing the entire FAQ below for readers' convenience.Why is this scheme?The incidence of fake Indian curre...
India-Pakistan invisible trade worth $5 bln a year – study Informal trade or smuggling of goods between India and Pakistan is estimated at over USD five billion, almost double the official two-way commerce between the two neighbours with history of chequered ties, said an ASSOCHAM study.There are more exports from India than imports...
India will take 126 years to catch up to the West in education – study India does have ambitions to reach the level of developed nations in education, but it will take at least six generations or 126 years to scale up to the top standard, if the country continues at its present pace in one of the most vital sectors, an ASSOCHAM Paper has said.“...