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In the wake of FM Arun Jaitley presenting the 2016-17 Union Budget, rating agency Moody's Investors Service warned that deficit reduction will remain challenging for the PM Narendra Modi led NDA dispensation and described it as moderately credit positive for most sectors except public-sector banks(PSBs).
1. Arun Jaitley's Budget 2016: Atsi Sheth, a Moody's Associate Managing Director for the Sovereign Risk Group, said in a note that the Budget proposals do not contain significant measures to address structural fiscal challenges, such as the government's low tax revenue base and the vulnerability of government finances to economic shocks. This means, any deficit reduction will come from either cyclical upswings or tactical fiscal management, rather than a broad-based fiscal consolidation strategy, she said. -
2. Arun Jaitley's Budget 2016: According to the report, the Budget is credit negative for public sector banks due to the insufficient allocation of capital for the sector, as the government has stuck to the capital infusion roadmap announced last year, budgeting just Rs 25,000 crore in capital injections next fiscal.
3. Arun Jaitley's Budget 2016: "Budget is modestly credit positive for the sovereign, since it indicates a continued commitment to gradual fiscal consolidation by bringing down fiscal deficits to 3 per cent over the next two years," Atsi Sheth said. According to Capitaline data, gross non-performing assets of 39 listed banks surged to Rs 4.38 trillion in the December quarter, up from Rs 3.4 trillion in the previous quarter. Most of this is contributed by state-run banks. -
Jewellers strike: Many jewellery houses in the country including in Delhi are closed since March 2 after Finance Minister Arun Jaitley announced one per cent excise duty on non-silver jewellery in the Budget. However, most of the jewellery showrooms in Tamil Nadu remained open today for regular trading.
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Small savings schemes interest rate: Arun Jaitley said no country can have "a system where lending rates are low but deposit rates are high. The two are interlinked". The government had on March 18 announced cut in interest rate on PPF to 8.1 per cent, on Kisan Vikas Patra (KVP) to 7.8 per cent from 8.7 per cent, on girl-child saving, Sukanya Samriddhi Account to 8.6 per cent from 9.2 per cent and senior citizen savings scheme to 8.6 per cent from 9.3 per cent with effect from April 1.
