government's move to consolidate public sector banks indicates its resolve to address slowdown in GDP growth, as country's ecomy expanded at its weakest pace in over six years in April-June quarter of 2019-20, industry said on Friday.

GDP growth slows in Q1

A sharp deceleration in manufacturing output and subdued farm sector activity pulled down India's gross domestic product (GDP) growth to 5 per cent in April-June quarter.

gross value added (GVA) growth in manufacturing sector tumbled to 0.6 per cent in first quarter of this fiscal from 12.1 per cent expansion a year ago.

"Well this certainly ruined my Friday & will dampen weekend. A lot of work to be done. But I remain steadfastly optimistic. Was pleased to see bank consolidation anunced by @nsitharaman. A 'reform a week' is just kind of tonic we need...," Mahindra Group Chairman Anand Mahindra tweeted.

w, with government and Reserve Bank having common prescription, ecomy should bottom out soon and things should improve in coming quarters, Assocham President B K Goenka said.

READ | Nirmala Sitharaman Anunces Four Major Bank Mergers: Full Details

Government anunces big Bank reforms

government anunced four major mergers of public sector banks, bringing down ir total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.

United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank, making proposed entity second largest public sector bank (PSB).

Industry weighs in on Bank mergers, ecomic measures

Commenting on consolidation exercise, Ficci President Sandip Somany said decision reflects government's commitment to provide country financial base on which we can grow and move towards USD 5 trillion mark.

Goenka said se mergers would result in better banking to customers, more credit to industry and agriculture, professional governance structure and a greater automy and accountability of bank boards.

" pace of expansion of GDP and GVA in Q1 FY2020 was resoundingly lower than forecast, driven by a collapse in manufacturing GVA growth, even as performance of most of or sectors was largely along expected lines," Aditi Nayar Principal Ecomist ICRA Ltd said.

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Ranen Banerjee, Leader- Public Finance and Ecomics, PwC India said while situation may t be as bad given headwinds ecomy is facing, this will furr dent sentiment and put downward pressure on consumption.

case for anuncing enhanced government capital expenditure becomes furr strong sacrificing fiscal prudence a few basis points to positively impact sentiment, he added.

Commenting on consolidation of banks, automotive industry body SIAM's President Rajan Wadhera said such anuncements will have a positive impact on ecomy, consumer sentiments and in turn, benefit auto industry.

Deloitte India Partner Sanjoy Datta termed it a very positive move, however, adding that key to success would be to ensure rigour in execution of mergers with specific emphasis on techlogy systems and human assets.

READ | Public Sector Bank mergers anunced: 10 PSBs become 4; 12 remain

Bank consolidation is a good move from government towards improving efficiency of PSBs, Prakash Agarwal, Head-Financial Institutions, India Ratings and Research said. 

Commenting on GDP numbers, CII President Vikram Kirloskar said moderation in growth print was t completely unexpected but at same time does reinforce concerns that industry has about entering a phase of slowdown. 

While t at variance with global growth trends, CII hopes that India should buck trend with appropriate interventions from government, he said 

"As a very receptive government, we have seen prompt action in terms of first tranche of stimulus being anunced on 23 August and significant measures on bank consolidation being anunced today. CII is expecting that Finance Minister would soon follow this up with next tranches of stimulus measures, which would help ecomy turnaround," said CII president. 

He furr said that despite lower GDP print, it is heartening to te that agriculture growth moved to positive territory of 2 per cent in first quarter after recording negative growth in previous quarter. 

READ | GDP growth falls to 5% for Q1 even as govt anunces key measures