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Banking News dated 19th September 2018

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Banking News: September 19, 2018


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Bank Merger Triggers Fear of Job Loss,  Many Customers Mull Shifting Accounts


Bank Merger Triggers Fear of Job Loss,
Many Customers Mull Shifting Accounts

Rounak Kumar Gunjan
The News18 Online
Published on September 19, 2018


The Centre’s decision to amalgamate Vijaya Bank, Dena Bank and Bank of Baroda in order to consolidate stressed financial assets has left most, if not all, junior employees of the three banks worried.

Mumbai, September 19: Hours after Finance Minister Arun Jaitley announced the merger of three state-owned banks on Monday, Dena Bank employee Vinay Prakash started receiving phone calls from his juniors. Every query stemmed from an innate fear of job loss.


The Centre’s decision to amalgamate Vijaya Bank, Dena Bank and Bank of Baroda in order to consolidate stressed financial assets has left most, if not all, junior employees of the three banks worried.

“I received at least ten calls at night asking me as to what will happen. The senior officials knew about it but it is only natural that the others worry. Bank mergers in the past have seen jobs being lost but this is time there is certain assurance for the better,” said Prakash.

The senior bank employee draws his assurance from what Jaitley said during the news conference on Monday. “No employee will face any service conditions which are adverse in nature. The best of the service conditions will apply to all of them,” he said.

However, the announcement does not seem to have provided the much needed affirmation, especially to the ones at the bottom of the hierarchy. Ram Chauhan, an ATM guard in Delhi, does not understand the financial jargon behind the merger but has seen jobs being lost in the past when State Bank of India merged with its subsidiaries.

“One of my colleagues told me that the three banks will become one. I don’t know what that means but in the neighbouring State Bank of Patiala ATM, the guard lost his job as the ATM closed down after the merger,” said Chauhan.

The fear of job loss was also reiterated by the general secretary of the All India Bank Employees Association (AIBEA). Opposing the central government's decision to merge the three public sector banks, CH Venkatachalam, the trade union general secretary, said: “Firstly, there is no evidence that merger of banks would strengthen the banks or make it more efficient.”

He said no miracle happened after the merger of five associate banks with SBI. "On the other hand, it has resulted in closure of branches, increase in bad loans, a reduction of staff and a reduction in business. For the first time in 200 years, SBI has gone into loss," Venkatachalam said. According to him, the bad loans of five associate banks of SBI as on March 31, 2017 were about Rs 65,000 crore and that of SBI Rs 1,12,000 crore - that is a total of Rs 1,77,000 crore.

After the merger, SBI's bad loans in 2018 increased to Rs 2,25,000 crore, he said. The banking industry's bad loans as on March 31, 2018 stood at Rs 895,600 crore.

Bank mergers can also lead to some customers switching to other banks. "I have an account with Vijaya Bank for decades now. I wouldn't want anything to change. Is't its unfair customers are given no choice at all? One fine day everything changes and you need to comply with it," said Rahul Kinshuk, a resident of Mumbai.

According to the 2017 Retail Banking Satisfaction Study by the global marketing firm JD Power, 46 percent of respondents whose banks went through a merger within the previous 12 months reported they would definitely switch banks.

But among retail banking customers whose banks merged one to three years prior to the survey, only 29 percent said they would move on.An older study by the Deloitte Centre for Banking Solutions found that of those who did move to another lender, a surprising 36 percent said they did so for emotional reasons.

Earlier, India had asked RBI to prepare a list of candidates for merger among 21 government-controlled lenders as it seeks to strengthen a banking system laden with bad debt. In a meeting in August, finance ministry officials also asked the Reserve Bank of India to suggest a time frame for the consolidation.


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Petrol, diesel rates scale new highs

The Press Trust of India
Published on September 18, 2018


New Delhi, September 18 (PTI):  After a one-day hiatus, petrol and diesel prices Tuesday were hiked again to new highs. A 10 paise per litre hike in petrol price and a 9 paise a litre increase in diesel was affected Tuesday, according to a price notification of state-owned oil marketing companies.

Petrol in Delhi now costs Rs 82.16 per litre and diesel is priced at Rs 73.87 a litre. In Mumbai, petrol priced touched an all-time high of Rs 89.54 per litre. It costs Rs 83.91 in Kolkata and Rs 85.31 in Chennai. A litre of diesel in Mumbai costs Rs 78.42, Rs 75.53 in Kolkata and Rs 78 in Chennai, according to the notification.

A combination of a dip in rupee value against the US dollar and rise in crude oil prices has led to a spike in fuel prices since mid-August. Petrol price has since risen by Rs 5.02 per litre and diesel by Rs 5.15 -- the most in any one-month period since the daily revision in fuel prices was introduced in June last year.

Rates vary from city to city and from pump to pump depending on local taxes and transportation cost. The deadly cocktail of high oil prices and depreciating rupee has made imports costlier and led to a surge in fuel prices.

Price of Brent crude, benchmark for half the world's oil including India's, was hovering around USD 80 per barrel while rupee traded at 72.8112 to a US dollar Tuesday, nearing a record low of 72.9138 touched last week. India is 81 per cent import dependent to meet its oil needs.


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Very high petrol, diesel prices
hurting people, says Nitin Gadkari

The Times of India
Published on September 19, 2018


Mumbai, September 18:  As fuel prices inch closer to the psychological Rs 90-mark in the city where and diesel are the costliest, Union transport minister Tuesday admitted that fuel prices are "very high and hurting the public".

While petrol was selling at Rs 89.54 a litre in the city Tuesday, up 10 paise from Monday, and diesel at Rs 78.42, up nine paise, in over a dozen cities in the state, petrol is already selling at Rs 90-91 a litre, and diesel over Rs 80.

".... one thing is there that (fuel) rates are very high and it is a situation where definitely people are facing problems," Gadkari said while addressing the third Bloomberg India Economic Forum here.

Gadkari also said he has been told that there is a likelihood of the global crude prices going down. He, however, did not clarify on the source of his information.

The minister, who is in charge of shipping, ports, road transport and also Ganga rejuvenation, was replying to a specific question on high fuel prices and if we should expect any duty or tax cuts in order to make it cheaper for the common people, and said lowering taxes is not in his remit, but of the finance minister.

It can be noted that Maharashtra has the highest fuel cost among all the states as it charges the highest VAT on the petrol and diesel at a little over 39 per cent, including the Rs 9 surcharge on petrol and Re 1 on diesel.

While the state charges 25 per cent value-added tax on petrol in Mumbai, Thane, and Navi Mumbai, it charges 26 per cent in the rest of the state. For diesel, VAT is 21 per cent in Mumbai, Thane and Navi Mumbai, and 22 per cent rest of the state, with a surcharge of Re 1 a litre across the state.

Petrol and diesel prices in Mumbai have gone up by Rs 2.60 and Rs 4.03 a litre, respectively, since August 31. In cities like Parbhani, Nandurbar, Nanded, Latur, Jalgaon, Beed, Aurangabad and Ratnagiri, among others, petrol has crossed the Rs 90-mark Sunday.

The issue of high fuel prices, which will directly trickle into inflation, comes months ahead of the general elections scheduled for next year. If anything, the depreciation of the rupee against the dollar only aggravates the pain.

In the meeting, he also appealed bankers to be more amenable to funding road projects stating that 99 per cent of the projects stuck have been cleared by his ministry including through Cabinet decisions

"Clearing stuck projects has helped the banks as otherwise over Rs 3 lakh crore of assets would have slipped into non-performing assets pile," said Gadkari.

He also said that resources is not a worry for his ministry at present and added that expenditure is something which needs focus at present.


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RBI has elbow room to sell another
$25 b forex to support rupee: SBI

The Business Line
Published on September 19, 2018


Mumbai, September 18: The Reserve Bank of India (RBI) could sell at least an additional $25 billion from its reserves to support the rupee, according to the State Bank of India’s Ecowrap research report.

This observation comes in the backdrop of the rupee weakening by 48 paise on Tuesday, a whisker away from 73 to the dollar.

The Indian unit closed at yet another life-time low of 72.9775 against the dollar on Tuesday despite measures announced by the government last weekend to curb the widening current account deficit and support the rupee.

Last weekend, the government had announced measures, including permitting manufacturing entities to raise $50 million for up to one year, exempting interest payments made by an Indian company or a business trust to a non-resident in respect of offshore rupee-denominated bonds issued between September 17, 2018 and March 31, 2019, from withholding tax, and allowing foreign portfolio investors to invest more in corporate bonds.

Among the next steps or continued steps to thwart the turbulence in foreign exchange market even as the RBI is focussed on managing exchange rate volatility, the SBI report said: “RBI could sell at least an additional $25 billion from its reserves to support the rupee, based on our historical analysis of the RBI intervention patterns since 1990s.

Immediate measure

“Coupled with this, the RBI should monitor the NDF (non-deliverable forward) market more closely...oil companies must be asked to purchase all their dollar requirements directly from the RBI through a single bank as in 2013.”

“As an immediate measure, the RBI can aggressively intervene and supply the dollars in the market (both spot and forward) as it has huge forex reserves,” said Soumya Kanti Ghosh Group Chief Economic Adviser, SBI.


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Government sees rupee at Rs 72 - Rs 73
against US dollar as 'fair value'

The Business Standard
Published on September 19, 2018


The rupee could again come under pressure once the new US sanctions on Iran comes into force, the Finance Ministry source said

New Delhi, September 18 (Reuters):  India sees rupee value of 72-73 against the U.S. dollar as "fair value," a senior finance ministry source said on Tuesday, after the government announced a raft of measures last week to stabilise the falling local currency.

The rupee had fallen more than 11 per cent against the dollar this year and is the worst performing Asian currency. It was trading at 72.40 to the dollar, compared with Monday's close of 72.51.

"The rupee could again come under pressure once the new US sanctions on Iran comes into force," due to a possible rise in oil prices, the source who declined to be named told Reuters.

Iran's oil exports have been falling in recent months as more buyers, including its second-largest buyer India, cut imports ahead of U.S. sanctions that take effect in November.

Washington aims to cut Iran's oil exports down to zero to force Tehran to re-negotiate a nuclear deal.


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SBI to install solar panels over
10,000 ATMs in two years

The Financial Express
Published on September 19, 2018


Mumbai, September 18 (PTI):  In a step towards becoming carbon neutral, country’s largest lender State Bank of India (SBI) is looking to install solar panels over around 10,000 ATMs across the country in the next two years, a senior official said.

Currently, nearly 1,200 of the bank’s ATMs are running on solar power. “We are going to take this number to up to 10,000 ATMs in the next two years,” the bank’s chief financial officer, Prashant Kumar, told reporters Tuesday.

The lender has installed rooftop solar panel on 150 of its building across the country and is in the process of identifying more such locations.

“Our aim is that by next year, close to 250 buildings of the bank will be having solar panels,” he said.

The bank is also planning to replace all its vehicles with electric vehicles by 2030. Kumar further said that the bank has embarked on a journey to turn carbon neutral and aims to achieve it by 2030.

It is organising a green marathon starting September 30, to be held in 15 cities across the country.


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Banks pushing for supply chain finance
on back of low SME bad loans

Nikhat Hetavkar
The Business Standard
Published on September 19, 2018


Negligible non-performing assets in the
segment is a driving factor for banks

Mumbai, September 18:  Banks are increasingly pushing for supply chain finance (SCF) due to its lower delinquency rates and easy disbursals. These include Bank of Baroda, Axis Bank and YES Bank.

The SCF provides banks with greater opportunity for leveraging cross-selling and data analytics. “SCF is a win-win opportunity for all stakeholders in the supply chain ecosystem — the corporates, their suppliers and dealers," said J P Singh, head, small and micro enterprises (SME), Axis Bank. It links small vendors to the large corporates. This enables SMEs to access credit at a lower cost with minimal documentation and lesser collateral.

Negligible non-performing asset (NPAs) in the segment is a driving factor for banks, which they attribute to the inherent structure of the SCF. Bank of Baroda claims to have zero NPAs in this segment. “In the past one and a half year since we started this business, we have sanctioned over Rs 10 billion and have around 25 anchors,” said Lithesh Majethia, head, SCF, Bank of Baroda. Axis Bank's SCF arm has seen a steady compound annual growth rate of 26 per cent since the past three years.

The corporate linkages serve as an assurance, said experts. “Any default in repayment results in stop supply invocation by the large corporates, which can jeopardise the business' existence. This acts as a deterrent for borrowers,” said Singh. According to YES Bank, corporate anchors also help banks in the delinquency management and keep NPAs low.

SCF solves a lot of problems associated with lending to the SMEs. A key challenge is the lack of data when it comes to new to banking (NTB) customers. "The challenge in SME lending is to reach and identify them and veracity of financial data of the borrower. This gets mitigated to a large extent in SCF by generating credit comfort from borrower's transactional behaviour with large corporate," said Sumit Gupta, group president and head, SME Banking, YES Bank. The bank has seen continuous on-boarding of NTB clients. This is reflected in clients’ contribution of over 50 per cent in incremental supply chain MSME book in FY18, said Gupta.


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US-China trade war: Beijing hits back by levying
tariffs on $60 billion of Washington goods

The Financial Express
Published on September 19, 2018


Beijing, September 18 (Reuters):  China will levy tariffs on about $60 billion worth of U.S. goods in retaliation for new U.S tariffs, as previously planned, but has reduced the volume of tariffs that it will collect on the products. The tariff rates will be levied at 5 and 10 percent, instead of the previously proposed rates of 5, 10, 20 and 25 percent, the Finance Ministry said on its website late on Tuesday.

China will impose a 10 percent tariff on U.S. products it previously designated for a rate of 20 and 25 percent. Liquefied natural gas (LNG), for example, was previously under the 25 percent tariff category but now will be subject to a tariff of 10 percent.

The new tariff measures will take effect on Sept. 24, the date when the Trump administration says it will begin to levy new tariffs of 10 percent on $200 billion of Chinese products. The tit-for-tat measures are the latest escalation in an increasingly protracted trade dispute between the world’s two largest economies.


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US-China trade war:
Alibaba’s Jack Ma says the tariff friction
between Beijing & Washington could last 20 years

The Reuters
Published on September 18, 2018


Shanghai, September 18 (Reuters): Alibaba chairman Jack Ma said on Tuesday that trade frictions between the United States and China could last for two decades and would be “a mess” for all parties involved, citing weak trade rules. Ma was speaking at an Alibaba investor conference hours after Washington said it would impose duties on an extra $200 billion worth of Chinese imports, drawing a warning from Beijing that it would retaliate.

Ma said trade tensions would likely impact Chinese and foreign companies immediately and negatively. He predicted that Chinese businesses would move production to other countries in the medium-term to get around the tariffs. “You may win the battle, but you lose the war,” Ma said at the shareholder event in Hangzhou.

“Middle term, a lot of Chinese business will move to other countries,” he added. Ma said new trade rules were needed over the long-term. “Even if Donald Trump retired, the new president will come, it will still continue…We need new trade rules, we need to upgrade the WTO,” he said, referring to the World Trade Organization.

Ma made the comments in what he said was his last speech to shareholders as chairman of the Chinese internet giant. He announced last week that he will step down within a year and hand the company reins to chief executive Daniel Zhang.

Ma met with U.S. President Donald Trump last year in a high-profile meeting where he promised to create 1 million U.S. jobs linked to small merchants selling items on Alibaba platforms. Trade relations have since deteriorated between China and the U.S. in a tit-for-tat escalation in tariffs.


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NPA saga – where do we go from here?

Himadri Bhattacharya
The Business Line
Published on September 19, 2018


For effective change, the Board for Financial Supervision
should be recast, providing it statutory status akin to the MPC

As the high-decibel slug-fest over the fugitive promoter of the now-defunct Kingfisher Airlines plays out in the headlines, it is instructive to turn back to the RBI’s financial stability report (FSR) of June 2012.

Here, the RBI voiced its concern about the relatively large loan exposure of a comparatively small set of PSU banks to the airlines sector.

The words were clear and sharp: “Asset quality of banks’ credit to the airlines industry came under some stress in recent periods, driven largely by the performance of some specific airline companies. Sharp increases in impairment and restructuring in the sector saw the share of this sector in aggregate banking system NPA and restructured assets rise disproportionate to its share in banking sector credit. There was significant concentration discernible in distribution of credit to the airline sector as ten banks accounted for almost 86 per cent of total bank credit to this sector. As at end-March 2012, nearly three quarters of the advances of banks, which have an exposure of above Rs. 10 billion to the airline industry, were either impaired or restructured. PSBs accounted for the major share of these exposures.”

To bring in some perspective, while the loans to the airlines sector was barely 0.8 per cent of total loans of banks, the sector’s restructured loans were 12 per cent of the total restructured loans of banks. Also, the loans to all airline companies were not impaired/ restructured. Only “some specific airlines” were involved. This careful choice of words notwithstanding, the whole world knew who the restructuring largesse was aimed at.

Extension of restructuring

That this concern was raised barely 18 months after the RBI had permitted in August 2010, at the instance of the then government, a generous recasting of loans to a few airlines companies on the pretext of being sensitive to the latter’s requirement is enlightening.

It also alludes to the internal tension, conflict and ambiguities that the RBI as the banking regulator and supervisor must have faced in the wake of the massive forbearance in the name of restructuring of overdue loans that began in 2008. Put differently, it laid bare the pitfalls of banking regulation and supervisions being under one roof.

The adverse implications

One obvious casualty of widespread restructuring was the supervision of banks. The examiners of banks never had a clear idea on what to do with the so-called restructured loans, particularly in respect of medium and large enterprises, which were indistinguishable from NPAs. Or, for that matter how restructuring was different from ever-greening. This was important because each full-scale annual examination of any bank involves, among others, calculation of its net worth, based on realistic and independent assessment of provisions required for bad loans.

It is highly possible that the examiners of the SBI in 2011, for example, raised the issue of a huge shortfall in provisioning in respect of Kingfisher Airlines.

How this issue was finally resolved within the RBI can at best be a matter of conjecture for outsiders.

But what is almost certain is that in the years following the introduction of generous restructuring, supervision of banks was largely “kind-hearted”, something that former Deputy Governor SS Tarapore had cautioned against many years back. And one can say with the benefit of hindsight that had the RBI examiners been successful in recognising Kingfisher as an NPA then, recovery efforts could have started in time.

The standard and quality of supervision post-2008 dropped significantly, as evidenced by the fact that it required a special exercise in the form of Asset Quality Review (AQR) years later in 2014-15 to begin a process to reveal the true extent of NPAs in banks. Even afterwards, banking supervision was involved in a sort of “cat and mouse game” in unearthing NPAs in a few private sector banks.

Suffice it to say that banking supervision lost its moorings during these years, and its leadership seems to have done little to correct the situation. This adversely impacted credit discipline and governance in banks, in general. Foreign portfolio investors (FPI) have often wondered if there were any objective and rule-based provisioning norms for banks in India.

This does not mean a benign inquisitiveness on their part, since the market makes its own estimate of the provisioning shortfall which gets reflected in the price of banks’ equity, which in respect of most PSU banks have been trading at discounts to their respective book values for quite some time now.

Lessons learnt at a cost

Fortunately, the lessons arising out of the politically-inspired and directed “restructuring” of overdue loans have been learnt and this term has been purged out of the regulatory lexicon in February this year.

But what a costly lesson it has been! By some estimate, the true amount of NPAs is close to 10 per cent of India’s GDP. Given that the most optimistic recovery wouldn’t exceed 20 per cent of the loan amounts due, the dead-weight loss to the country’s economy is around 8 per cent of the GDP. This is unprecedented and will have negative welfare implications for the country’s common citizen.

The way forward

In the aftermath of the collapse of Lehman Brothers exactly 10 years back, a loaded issue was raised by a top RBI official in a speech: “Does the financial sector impose a tithe on the economy?” If the Indian experience alone is any guide in this regard, the answer is “yes it did, in a broader sense”. And one takes into account not just the present humongous recapitalisation needs, but also the consistent low return on equity generated by most PSU banks. However, as with most episodes in history, there was nothing inevitable about it. The three most important steps that the Indian authorities need to take for preventing its recurrence are:

(a) All directions from the government to the RBI in matters relating to regulation of banks, financial institutions and markets under the RBI’s oversight should henceforth be formally done invoking the provisions of section 7(1) of the RBI Act, 1934.

(b) The Board for Financial Supervision (BFS) should be recast through an amendment to the RBI Act to provide it a statutory status a la the Monetary Policy Committee. The objective here is to ensure its independence, professionalism and accountability.

(c) A high-level review of the supervisory function of the RBI should be undertaken, with emphasis on the efficacy, independence and professional standards and rigours of off-site and on-site supervision of banks, NBFCs and urban cooperative banks and necessary measures in the light of its findings ought to be taken.

The writer is a former central banker and consultant to the IMF.


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Raghuram Rajan’s balanced assessment
calls for a more considered response

Editorial: The Business Line
Published on September 17, 2018


A few days ago, former Reserve Bank Governor Raghuram Rajan made a lucid, objective submission to the Estimates Committee of Parliament on the issue of non-performing assets of public sector banks in particular. From his account, it appears that both the previous and present dispensations are to blame for the ₹10.3-lakh-crore NPA mountain (11.6 per cent of gross advances) as on March this year – even as there can be no denying that the implementation of the Insolvency and Bankruptcy code since mid-2016 has been a major step forward. While the Congress and the BJP trade charges over crony capitalism having created this mess, the truth is more complex; as Rajan puts it, “it's hard to tell exuberance, incompetence and corruption apart”. Hence, “irrational exuberance” between 2006 and 2008 caused the initial build-up of bad debts in infrastructure sectors in particular, such as power and roads.

Rajan, who was RBI Governor for three years till September 2016, admits that “until the bankruptcy code was enacted, bankers had little ability to threaten promoters with loss of their project”. However, he also observes that he had urged the PMO to investigate certain high-profile cases of fraud, on which he “is not aware of (the) progress”. The RBI’s Financial Stability Report (June 2018) observes that the top 100 large borrowers accounted for 15.2 per cent of gross advances and 26 per cent of the GNPAs (or gross NPAs) of scheduled commercial banks (SCBs). It also points out that if the top three individual borrowers of a bank fail to repay, the impact would be significant for five banks which account for 9.8 per cent of the total assets of SCBs. The populist clamour to bring top borrowers to book is, therefore, not without basis. In fact, the PV Narasimha Rao government even disclosed a list of top defaulters in Parliament. However, a more informed debate is called for.

The IBC process has brought in an element of transparency, while relieving bankers of the fear of being prosecuted for taking a haircut on their assets. While resolution is not proceeding at the pace envisaged by the RBI, the 300-day timeline is making a difference, when compared with the delays under the earlier regime of debt recovery tribunals. Efforts such as 5/25 scheme for infra projects and strategic debt restructuring, introduced during Rajan’s time, have not helped in asset revival or resolution; in the absence of a water-tight legal framework, promoters managed to get away. The “asset quality review” initiated by Rajan has helped in delineating the NPA mess.

Much depends on the transparency and efficiency of the IBC process, with the RBI’s February 12 circular tightening the screws on defaulters. The Centre should stay the course, and not press for a dilution of the circular, which promises relief to the MSMEs. While encouraging banks to lend to agriculture and small units, big defaulters should be called to account.


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Automation without tears: Government,
India Inc must invest in up-skilling for this

Editorial: The Financial Express
Published on September 19, 2018


World Economic Forum report says that automation
will make 75 million existing jobs redundant by 2022

New Delhi, September 18: A new World Economic Forum report says that automation will make 75 million existing jobs redundant by 2022. Even though it will create 133 million new ones—a net gain of 58 million jobs—WEF founder Klaus Schwab warns that this net gain is not a “foregone conclusion”. This uncertainty stems from governments’ and private players’ capacity to invest and re-skill or up-skill millions in the workforce as much as from the eventual scope of automation itself.

Governments and companies will both have to step up their game if the lose-lose situation is to be avoided—one where rapid technological developments mean widespread automation even as the talent gap and inequality widen because enough resources weren’t allocated to developing the skills of the workforce.

There may seem no real reason to panic—McKinsey Global Institute’s (MGI’s) mid-point estimate of job loss due to automation in India stands at 57 million while its baseline scenario projects 114 million new jobs due to the resulting higher incomes and productivity hikes. But, that only holds if India is able to up-skill workers at a drastic pace. MGI estimates that 100 million new jobs by 2030 will need at least a secondary-level education and jobs requiring college-level degrees to go up by 50%.

In sharp contrast, India’s manufacturing sector has staggering levels of under-education—in textiles/clothing industry alone, an Icrier paper estimates, 55% of workers with no formal education, nearly two-thirds of those with below primary level education and 54% with primary education hold jobs that require higher levels of educational attainment. Correcting the existing mismatch while, at the same time, creating potential for a future of rife automation, is going to need massive targetted efforts, including sizeable capital investment.

The WEF report estimates that nearly 54% of the country’s workforce today is in need of re-skilling, with nearly 41% needing re-skilling/up-skilling levels that could take anywhere between one month to over a year to achieve—India has the fourth-highest average re-skilling needs in terms of days needed to achieve this. While 83% of the corporate respondents from India in the WEF study are looking to automate the work in response to shifting skill needs and 51% say it is likely that they will cut staff that lack the requisite skills, a high 79% say it is likely that they will consider retraining existing employees, and 78% also say that they will consider hiring new permanent staff with skills relevant to new technologies.

This means India Inc is willing to do some of the heavy-lifting when it comes to bridging the skills gap. This puts the ball squarely in the government’s court. Apart from fixing the mess the country’s education system is in—including the mismatch with industry-needs, which will mean a greater focus on STEM and non-cognitive soft skills—the government will need to give job creation a boost through increased investment, with the private sector, and reforming antediluvian labour laws. For those who will still fall through the gaps, the government, WEF suggests, must come with efficient social protection schemes.

Source: Internet Newspapers and anupsen articles

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