Page 27 - Banking Finance November 2019

ARTICLE

percent from a year earlier after adjusting for one-time pressure after the shock default by Infrastructure
gains or losses, according to data provider Capitaline. Leasing & Financial Services (IL&FS) in September last
year.
Small Finance Banks, Corporate Banks, Cement stood out
Y Key segments such as agriculture, industry indicate
in terms of performers during Q4. Small and Midcap IT, slowdown. The industrial slowdown has its origin in real
select real estate, sugar, fertilisers, paper, and hotels also
estate and infrastructure crisis.
did well.
Y Industrial sector stress is on account of high costs of
borrowing, increase in commodity prices and a
Auto, auto ancillaries, carbon and steel companies
underperformed. Metal companies reported their first slowdown in global trade.
contraction in profits in the last three years. Y Weak rural activity indicators have also been impeding
growth recovery as captured in low rural wages,
Lower sales have dragged profits down as operating leverage slowdown in credit to medium scale industries and
has also faded. Slow global growth, liquidity squeeze. nascent recovery

Y The weakening jobs scenario
with urban unemployment rate at
7.8 percent and rural at 5.3
percent are significant causes of
concern.
Y Shadow banks were responsible
for nearly a third of incremental
loans in the system over the past
three years. But, since September
last year, when a funding crunch
forced them to focus on survival,
credit growth in the system has
slowed.
Y Other factors may also be
contributing to the current
Government spending slowdown and rural earning slowdown is lack of demand. The raises for government
slowdown are all impacting revenue and profit growth in workers mandated by the last pay commission have
Q4. started to dwindle in their impact,
Y But, the consumption cutbacks on durables and
Sectors affected include auto, auto ancillaries, agrochem,
consumer staples in recent months suggest that the
and NBFC. In Pharma, margin expansion was seen, while
Indian middle class is also not playing ball in the overall
FMCG companies cut costs including ad spend. Interest
somber mood. Companies are having a difficult time
depreciation and taxes grew at a slower pace.
pushing volumes and raising prices.
On final expenditure front during 2018-19 growth has been Y Despite exports and imports growing at the same rate
seen in PCFE and GFCF while growth has declined in export, of 9 percent, India's trade deficit reached a record high
GFCE, import and CIS. Valuables have witnessed negative of $176 billion in 2018-19.
growth. Y According to data released by the commerce and
industry ministry on Monday, exports stood at $32.55
Factors responsible billion in March, taking the total tally in
Y Slow down in the fourth quarter GDP was due to 2018-19 to $331 billion. While it is the first time
temporary factors like stress in NBFC sector affecting that outbound trade has remained above $300
consumption finance. NBFCs have been under liquidity billion for two consecutive years, exports couldn't

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