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Next 2 months crucial for economy: SBI chief

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New Delhi: State Bank of India Chairman Rajnish Kumar has said the next two months will be crucial for the Indian economy. He also rejected concerns around credit squeeze after the merger of 10 public sector banks and said the crucial task was to protect customers coming into the anchor banks. With concerns around 25-quarter low GDP numbers high, and many sectors including auto and FMCG going through churning, the SBI Chairman said October and November months would determine if the current slowdown was “cyclical or structural”, reported the Economic Times. He added there were issues around the environment, change in mindset, and that all these factors had come at the same time.

On concerns around credit squeeze after the merger of 10 public sector banks, Kumar said the suggestions to merge PSBs were given 25 years ago and that credit slowdown could be taken care of if there is a strong execution team. “The biggest issue is IT, human resource and customer integration; we need to protect customers coming into the anchor banks,” Kumar told the daily.

The National Statistical Office (NSO) last week released the gross domestic product numbers for April-June quarter, which showed India’s GDP growth slipped to a 6-year low of 5 per cent as compared to 5.8 per cent in the previous quarter.

Comparatively, China, which is a much larger economy than India, had recorded a GDP growth of 6.2 per cent during the April-June period, slightly lower than 6.4 per cent record in the previous quarter. With the subsequent decline in GDP growth, India has fallen further behind its neighbour in terms of economic growth.

India had already lost its title of the world’s fastest-growing economy to China in the previous quarter when its economic growth slowed to 5.8 per cent compared to Beijing’s growth of 6.4 per cent.  Also, The auto sector is bleeding. Major automotive companies such as Maruti Suzuki India, Hyundai, Mahindra and Mahindra, Honda and Tata Motors reported a double-digit de-growth in August sales.

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Petrol, diesel price move up by a higher margin

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Petrol and diesel rates rose sharply on Friday as global oil prices remained firm reaching its highest levels this fiscal.

Petrol price increased by 19 paise per litre to Rs 81.89 per litre on Friday from Rs 81.70 per litre on the previous day.

Diesel price, on the other hand, increased by a higher margin of 24 paise to Rs 71.86 a litre, up from Rs 71.62 a litre on the previous day.

Oil companies began increasing pump prices of the two petroleum products from last Friday after a nearly two-month-long hiatus in the fuel price revision. The prices increased for five consecutive days before going for a day’s pause on Wednesday. It has risen on both days thereafter.

In five days, petrol price has gone up by 53 paise and diesel rate has risen by 95 paise per litre. With Friday’s increase, petrol price has now risen by 83 paise per litre and diesel by Rs 1.40 a litre since last Friday.

Petrol price had been static since September 22, and diesel rate hadn’t changed since October 2.

Though the retail pricing of petrol and diesel has been deregulated and oil marketing companies were following a daily price revision formula, the same was suspended for almost two months to prevent the volatility in the international oil markets from impacting the fuel prices regularly during the pandemic.

But with crude on the boil again on the news of a successful coronavirus vaccine launch soon, the patience was lost by the OMCs who finally resorted to the price increase to cover for their under recovery on the sale of two petroleum products.

The benchmark Brent crude has crossed $48 a barrel on the Intercontinental Exchange (ICE). It has remained over $ 43 a barrel for most part of November.

OMCs need almost 40 paise per litre increase in the retail price of petrol and diesel to cover for $ 1 increase in crude. Going by this yardstick, the product prices would have to be increased by up to Rs 2 per litre to cover the under recovery on its sale.

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