Providing infrastructure boost; cleaning up India’s banks and housing are among Finance Minister Arun Jaitley’s immediate to-do list. We take a look at what exactly the minister is looking to focus in these areas.
Providing infrastructure boost; cleaning up India’s banks and housing are among Finance Minister Arun Jaitley’s immediate to-do list. The finance minister very categorically said that strengthening of public sector banks (PSBs), infrastructure and housing will be top priorities for government next year. The Finance Minister said besides the ongoing tasks, completing the unfinished task of strengthening the PSBs is on the table for next year. If we want to formalise the economy, we have to strengthen the bank, Jaitley points out.
Taking stock of the structural changes done in 2017 so far, Arun Jaitley, “In 2017, India has seen more structural changes taking place than any time in the recent past. The changes in 1991 were more out of compulsion while the changes in 2017 more out of conviction.” In his address during FICCI’s (Federation of Indian Chambers of Commerce and Industry) annual general meeting, Arun Jaitley said that there may be some short-term adverse consequences of the structural reforms undertaken by the government. We take a look at what exactly the minister is looking to focus in the areas of Infrastructure, bank clean up and housing.
“Infrastructure creation, even the rural infrastructure, is core to India’s future growth story”, Arun Jaitley said. Laying emphasis on railways, Arun Jaitley said that while highways and ports have shown satisfactory results, infrastructure development in railways needs to be hurried. “Railway station, quality of trains, proposed bullet train, all need to be strengthened,” he said. In the last ten years, India has spent Rs 60 lakh crore in infrastructure. Finance Minister Arun Jaitley pointed out that the government has increased its allocation to infrastructure in the next budget. “In recent time, the government has increased infrastructure spending”, he had said, adding the Budget 2017-18 made allocation of Rs 3.96 lakh crore for infrastructure sector. In India, the infrastructure requirement is going to be big in the next five years, according to a report by CRISIL. India needs to spend at least Rs 50 lakh crore in next five years through the year 2022 to develop infrastructure, the country will see close to Rs 3,000 crore investment per day.
Strengthening lending of banks
“Banks have a lot of money lying with them, their lending capacity is limited due to lack of capital adequacy,” Arun Jaitley said. India’s banks are reeling under Rs 9.65 lakh crore of bad loans. In October, the government announced a massive Rs 2.11 lakh crore bank recapitalisation plan. After PM Narendra Modi said that his government has inherited a huge pile of NPA’s from the previous government, Edelweiss CEO and the new FICCI President Rashesh Shah said that he expects the process of resolution to be complete by 2020-21. The Prime Minister had questioned the silence and inaction of institutions, including FICCI on India’s bad loan mess. “I am not aware that if FICCI has done any survey on the way the previous government’s policies worsened the condition of the banking system. The hue and cry over NPAs these days is the biggest liability transferred by economists of the previous government,” Prime Minister Narendra Modi had said on Wednesday.
Affordable housing has been an important reform for the Narendra Modi-led government. The newly enacted law Real Estate Regulation Act (RERA) is a case in point. Apart from RERA, Housing for All by 2022’ is a Government of India initiative under which, the erstwhile Indira Awas Yojana was renamed as Pradhan Mantri Awas Yojana Grameen, and another scheme Pradhan Mantri Awas Yojana Urban, was launched in 2015. Under both these schemes a total of 50 million houses were targeted to be built by financial year 2022. The government’s budgetary support for these schemes has risen from Rs 11,600 crore in FY16 to Rs 29,043 crore in FY18. “We have to keep the momentum going on infrastructure creation, including rural infrastructure. Therein lies the core of India’s future growth story,” Arun jaitley said, laying specific emphasis on housing and sanitation.