Union Finance Minister Arun Jaitley on Tuesday said the Indian economy was on a strong wicket with sound macro-economic fundamentals.
At a press briefing called to detail the state of the economy, he said India had been the fastest growing major economy in the last three years and the attempt was to maintain high growth rate in the coming years. Economic Affairs Secretary S.C. Garg, Finance Secretary Ashok Lavasa and Department of Financial Services Secretary Rajiv Kumar made presentations.
The major announcement was by Mr. Kumar. He said the Union Cabinet had approved a massive recapitalisation plan for public sector banks (PSBs) worth Rs. 2.11 lakh crore. Of this amount, Rs. 1.55 lakh crore would be raised through recapitalisation bonds. Another Rs. 76,000 crore would be available from budgetary support and raised through market borrowings.
Here are the updates:
5.48 pm: The presser concludes with Mr. Jaitley asking a journalist not to jump to conclusions too soon, but only after registering the full impact of what was said today.
5.45 pm: The road projects announced today under 'Bharat Mala' include the existing projects, observes the Minister. On Rahul Gandhi terming GST ’Gabbar Singh Tax’, he says those who are used to 2G, coal scam will have problems paying genuine tax.
5.40 pm: GST collection is in transition phase. But last three months' collection are consistently raising, he says. Mr. Kumar says there will a differential inclusion on capital according to size and ethos of the banks.
5.35 pm: The huge spending on infrastructure announced today will give a fillip to private sector investment, he says adding it was to set right the lending scenario followed between 2008 and 2014. “Once you strengthen banks, appetite for their stock will improve.”
5.30 pm: The glide path of the fiscal deficit will continue to be maintained, Mr. Jaitley says. There's no embargo as far as willful defaulters are concerned. No veil of secrecy, he says. Their names can be published, he adds.
5.15 pm: It's back to Mr. Jaitley. He says the presentations have made it clear that the macro-economic fundamentals are strong. There’s need to increase public investment . Indiscriminate lending has led to non-performing assets (NPAs), which were kept under the carpet. Post demonetisation, public sector banks have adequate lending capacity now.
The Rs. 2,11,000 crore capital infusion and series of banking reforms are bold steps to address the NPA issue. Micro, Small and Medium Enterprises (MSME) is high priority area for fund infusion through increased lending.
5.10 pm: Mr. Kumar says this will directly benefit the MSME sector and employment. There will be 100 bank-approved project templates and sector specific, MSME customised Mudra financing products. The Cabinet decision will benefit enhanced market access. This will be facilitated through a GEM portal and will be connected to eCommerce portals. There will be special campaign in 50 high employment clusters.
5 pm: Stronger fundamentals will fuel public spending and this in turn will lead to stronger banks. Mr. Kumar is now presenting a two-year road map for PSBs.
Post systematic Asset Quality Review, stressed assets have been recognized as NPAs, Mr. Kumar says. The government infused about Rs. 59,000 crore capital to save the banks. Indradhanush was introduced to make banks Basel III compliant. Measures, such as the introduction of SARFAESI Act, SBI consolidation and signing of MoUs with 11 PSBs were also taken to strengthen the sector.
Mr. Kumar stresses on strong economic fundamentals. This is the take-off time and the Cabinet has announced an unprecedented PSB capitalisation plan of Rs. 2,11,000 crore, he says.
Rs. 76,000 crore for bank capitalisation will be from budgetary support and markets and Rs. 1.35 lakh crore will be from front-loaded recap bonds.
4.53 p.m.: The presentation now moves to housing, power and railways. Universal affordable housing is being implemented, says the Ministry. And there’s renewed focus on Indian Railways plus the SAUBHAGYA scheme to ensure power for all, it notes.
4.50 pm: Inter-country trade to be facilitated by improving the infrastructure, leading to border points, Mr. Lavasa says. Border road connectivity will be strengthened to enhance national security. About 2,000 km of coastal roads will be constructed in Phase I of 'Bharat Mala,' he observes.
4.45 pm: Mr. Lavasa is speaking on 'Bharat Mala', the biggest component of a road-building programme. Identified points are developed to remove bottlenecks, he says.
4.37 pm: Mr. Garg hands over the presentation to Mr. Lavasa, who briefs on infrastructure. Increased public expenditure translates into more investment and more jobs, he says. The government has consistently laid focus on public investment and infrastructure for welfare of common man. Special thrust has been laid on five key sectors: Roads, Housing, Railways, Power, Digital Infra.
Real GDP growth
4.35 pm: GST is reducing corruption and raising productivity, says Mr. Garg and very soon GST will contribute to the growth story.
Content fiscal consolidation in last four years
4.30 pm : A presentation is being screened, after which Mr. Jaitley will continue his briefing. There has been a consistent low inflation story, says Mr. Garg during the presentation.
Fiscal consolidation story is credible, Mr. Garg says, adding that the real GDP growth average is 7.5% in the last 3 years.
Highest forex reserves since Independence, says the Finance Ministry
4.25 pm: In the government's view, the fundamentals of the national economy continue to be strong, Mr. Jaitley says.
