Finance Minister Arun Jaitley had some reassuring words on NPAs on Monday when he said bad loans have reached the peak and expressed confidence that situation will get better with improvement in six sectors under stress.
He is sure growth will accelerate in the coming month against the backdrop of a projected good monsoon and consequent push to rural demand and a revival in private investment.
Jaitley is also optimistic that the government’s consistent reforms agenda will also add to the growth momentum.
Speaking at an Indian Women Press Corps event here, he said further: “With the provisioning in the last few quarters taking place, at least transparency has come about. You cannot conceal the balancesheets of the banks. So, whatever was the actual position, it has peaked and all the steps (are) taken as far as different sectors are concerned.”
Once the sectoral balancesheet improves in some of the sectors, “I think it will start tapering down and therefore, the peaks probably have been reached or thereabout”.
Jaitley listed out six stressed sectors, including steel, highways, power and sugar.
Gross NPAs of public sector banks (PSBs) went up to 7.30 per cent as of December 2015, from 5.43 per cent as of March 2015. In absolute terms, the reading increased to Rs 3,61,731 lakh crore in December, from Rs 2,67,065 lakh crore in March.
On growth, Jaitley said factors like high public spending, FDI and improved urban demand have led to a GDP growth of 7.5 per cent in a world which is moving at 3 per cent.
Going forward, he said, “… if you look down the tunnel, a moderate level of oil price range-bound, monsoon and the consequential impact of reduced sectoral stress in steel, highways, sugar, and power and a plausible impact over the next few quarters over balancesheet of banks, these could be a positive and therefore can add to your present growth.”
After two successive years of deficient monsoon, he said the prospects for this year seem positive.
“We have to see actual rainfall and that will not only add to agriculture, but also to rural demand. Therefore, rural demand has the capacity to push up private sector because of increased demand itself. So far, (monsoon) indications are positive,” he said.
On continuation of reforms agenda, the minister said there are 4-5 proposals pending and a few more are in the offing.
“So far we have maintained in the last two years consistently in one direction our ability to reform. Therefore, the world continues to watch us with crossed fingers as to whether that appetite continues or not,” he said.
“Some of the new proposals are put in the pipeline. Having cleared the Bankruptcy (Code), I have at least 4-5 (reform) proposals pending and 1-2 more which we are working on.”