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Narendra Modi and Budget 2016: In some bad news for the Narendra Modi led dispensation, ratings agency Crisil has said that there are no signs of Indian economy sharply rebounding in the next financial year as the fiscal policy remains restrictive. This revelation comes in the midst of the budget session of Parliament in which FM Arun Jaitley has already presented his Budget 2016 proposals laying out the direction and priorities of the NDA government. Here are top 5 noteworthy points about PM Narendra Modi led government roadmap and what it should be targetting: (Reuters)
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1. Narendra Modi and Budget 2016: "For economy, there is no sign of sharp turnaround in the coming fiscal. It needs support from accommodative monetary policy and less restrictive fiscal policy plus structural reforms (to have a turnaround)," Dharmakirti Joshi, Chief Economist, Crisil, told a gathering during the two-day India Rubber Meet-2016. (Reuters)
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2. Narendra Modi and Budget 2016: “2016-17 is a critical year for reforms and implementation of the measures announced in FY16 by the Modi government. The government, which is at its mid point, has a critical task of implementing the reforms during 2016-17, which were announced in 2015," Joshi added. (Reuters)
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3. Narendra Modi and Budget 2016: Leverage and non-performing assets (NPAs) of banks will remain a challenge in financial year 2016-17, Joshi said. "Fiscal 2017 which will mark the mid-point of the Modi government will be closely watched for its success in getting the pending big ticket reform bills such as the GST and Bankruptcy code passed. The passage of these bills would not only be a big sentiment booster but is necessary to enhance country's medium-term-growth potential," Joshi said. (Reuters)
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4. Narendra Modi and Budget 2016: "The big attention is required towards two sectors – power and banks," Joshi said, adding the NPAs, unless they are cleaned they will restrict the flow of credit into the system, and hence, will remain a constraint to growth. "Unless they (NPAs) are cleaned up it would be detrimental to growth. The arteries of the banking system needs to be de-clogged to ensure the smooth flow of credit," he said. (Reuters)
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5. Narendra Modi and Budget 2016: "What Modi government has done in the budget is that there is a clear focus on rural economy by introducing various measures that will also help the country's growth potential," Joshi said. Crisil has predicted that monsoon will be a major factor to decide the consumption. "At present the consumption is only on one leg that is urban. If it rains, the rural consumption will grow." (Reuters)
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